The small business guide to company credit scores

Cash flow solutions for small businesses
24 February 2021
3 minute read

You’re probably familiar with your personal credit score, but when was the last time you looked at your business' credit report?

If you’re unsure, you’re not the only one. Despite businesses being advised to check their credit score every 12 months, approximately 66% of business owners in the UK have never checked their company credit score before. What’s more, roughly 90% are unsure of what goes into it.

What exactly are the repercussions of this? Well, not only is a strong business credit score vital for obtaining funding, it also plays an important factor when looking for business insurance and negotiating contracts. As well as this, monitoring your credit score helps protect your business against fraud and identity theft.

When it comes to securing business finance, your company credit score can impact the rates and terms of which you get approved to borrow. For both banks and alternative lenders, it plays a big factor in lending and investment decisions.

How can SMEs prove their reliability to lenders?

There’s no doubt that for smaller businesses, funding is often difficult to secure. Unfortunately, access to finance for SMEs continues to be a major obstacle. Whilst bigger corporations can benefit from expensive credit assessors, smaller businesses simply don’t have this luxury. Not only is it a huge expense, it also requires a finance department for administration purposes.

Because of this, it’s important for you to stay on top of your company credit report and provide lenders with a clear picture of how your business will be able to manage its financial obligations.

Credit Passport: View your business credit score in real-time

For businesses that want to prove their financial reliability to lending institutions, Credit Passport is the go-to solution. Credit Passport’s platform enables SMEs to stay on top of their credit score, using real-time bank data to reveal how financial systems view a given business.

How does it work? It uses Open Banking data generated from your bank to provide your business with a simple alphabetical rating from A++ to E. The rating gives an accurate depiction of your business credit profile, which helps to provide crucial insights on areas for improvement.

Ultimately, when Credit Passport issues your business with a good credit score, it reassures lenders that your company is credible.

Get your business credit score today.

What happens if my business has a low credit score?

Contrary to popular belief, a low credit score is not the end of the world. From ensuring timely invoice and bill payments, to reducing credit applications, there are lots of steps you can take to improve your rating over time.

As a more immediate solution, if you have poor credit but need fast finance to grow your business, there are alternative options to consider. Certain funding streams are easier to get approved for than others - such as equity finance, asset finance and invoice finance arrangements.

Penny is a good example of this, as it advances businesses cash flow against unpaid invoices.

How Penny can help

Penny helps small businesses and freelancers get access to funding through selective invoice finance. Unlike other funding solutions, Penny doesn’t base approval on business credit scores or trading length.

When using Penny’s platform, you will be able to find out instantly whether finance can be raised on your invoice.

If the answer is yes, Penny will immediately pay for the invoice which means you can receive the money in your account in as little as 24 hours. Your client or customer then pays Penny at a later point, when the invoice is due.

It really is that simple!

Keeping on top of your business credit score

If you haven’t checked your credit score for a while, now is the time to do so. A continued awareness of your credit rating will enable you to make the necessary steps to improve it. For small businesses, this is crucial to long term success.

Though checking your credit score may be daunting, it forms an important part of understanding your business’s financial situation and how it will fare when trying to access finance. Remember, if your company credit score is less than ideal, there’s no need to panic. There are always options to help your business get the cash flow boost it needs.

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