Why is it important to check your business credit profile before you apply for funding?

UK’s No1 credit monitoring service, Experian shared to BFS why it is important to check your business credit profile before you apply for funding.

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It’s simple…because your potential lenders could be looking at this information when reviewing your application. Checking your business credit profile before you make your application, enables you to see if there are any reasons why you may not be accepted. You’re able to determine that your report is correct and up‐to‐date, and is showing your business in the best possible light. And if it isn’t, you’ll know what key factors you need to work on to improve your score.

However, more often than not, business owners are failing to check their business credit report, before applying for finance. In fact, 59 per cent* of SME financial decision makers have never checked their commercial credit report. Either because they don’t understand its importance or because they don’t realise that this information exists on them and that other businesses are actively using this information when assessing their level of financial risk.
Taking control of your credit position is one of the most effective ways to maximise your business’ chances of securing investment. Optimising your credit position increases your choice of funding options, enabling you to take advantage of the rich range of finance on offer; from bank loans and the government’s and Bank of England’s Funding for Lending scheme, to more alternative options such as invoice factoring, crowdfunding and ‘peer‐to‐peer’ finance.
And by knowing and understanding what’s in your credit report, you can give yourself the best chances of securing the type of finance that’s right for your business.

So, how is a business credit score determined?

Your business credit score is a measure of your business’ creditworthiness, which is made up from a number of different factors to understand the financial position of your business and its level of financial risk. Whether you’re applying for finance with a lender, credit with another business, competing in a tender process or simply trying to get a good deal on your business mobile contract, your business credit score will play a role.

Some of the elements used to determine your score, include:

  • Publicly accessible data such as Companies House records
  • Information on County Court Judgments (CCJs)
  • Information from current account providers, credit card companies and other trade credit providers
  • Your payment performance to other companies

  • These positive and negative factors are combined to create your score and all influence whether you’re seen to have good or bad business credit, impacting your ability to secure finance for your business.

    Show your business in the best possible light

    There’s no one simple ‘fix’ that will boost your credit rating overnight. Looking after your credit status needs to be a proactive process with two key objectives: (1) becoming, and staying, creditworthy; (2) fixing credit problems when they arise.

    There are three key ingredients to a healthy credit score: robust information, sound financial management and regular monitoring. 

    Information – the more data that is available about your company, the better. It means Credit Reference Agencies (CRAs) can validate this information and ensure your score accurately reflects your current situation. It’s also important to ensure that your data is kept up‐to‐date by informing Companies House, directories and CRAs of the changes to your firm they should know about e.g. a change of location or business status. Otherwise, the information available on your company will be unreliable, casting doubt on the firm’s dependability.

    Financial Management – paying invoices promptly, filing accounts on time, and limiting the amount of credit searches completed on your business in a short space of time, are all ways of helping to show that your business is financially sound. Paying invoices late or filing your accounts late could be interpreted as a sign of financial distress or that your business is having cashflow problems, which could be damaging to your credit rating.

    Monitoring – obtain access to your business credit report and check your score as part of your monthly administrative duties to avoid unpleasant surprises. Remember to use a specialist product that won’t leave a footprint on your credit record each time you check your report.


    How do I get my business credit report?

    You can check your business credit report through Experian My Business Profile. With My Business Profile, you get full visibility of your business credit report, which includes previous search details, credit account and business information. You’ll also find out the top factors influencing your score, so you can understand any issues and start to fix them.

    The Experian My Business Profile score ranges from 0 to 100, with higher scores indicating higher credit quality. Having a high credit score could help you to secure the best loans and lowest interest rates.

    And for a limited time only, you can get your business credit report for half price!

    It was great to speak to those of you that attended the Business Funding Show last week. But for those of you who we weren’t able to speak to, or who couldn’t attend, we have an exclusive show offer to share with you. But hurry – offer ends 29 February 2016

    You can get your business credit report, through Experian My Business Profile, half price for the first month!** That’s just £14.99 + VAT, reduced from £29.99 + VAT. And you can cancel at any time.

    How does the offer work?

    • Go to www.mybusinessprofile.com
    • Click on ‘GET MONTHLY ACCESS’
    • Enter the Referral Code: BFS2016 at the checkout, and the offer will be applied to your account

    To find out more, please visit: www.mybusinessprofile.com
    • * ComRes survey, 15.08.14
    • ** The offer applies to the first month only. After the first month offer period, customers will be charged the usual price of £29.99 + VAT per month, unless the account is cancelled. T&Cs apply.