Your business credit score is just like a personal credit score – It determines your business’s credit worthiness, the higher the score, the more credit you business is likely to be given. A sole trader uses their personal credit score to determine how credit worthy they are, but a limited company has a credit rating separate from a personal credit score, called a business credit score.
Like a personal credit score, a business credit score can be influenced positively and negatively by several factors which can increase and decrease your score. Here’s just a few:
Lenders will look at a business’s credit score when applications are made for loans and finance which is done through company credit checks. With a good business credit score, a business will have access to the best finance options with the lowest interest rates. Whereas if you had a bad business credit score you would receive high interest rates.
Not only lenders will look at a business credit score. Suppliers are likely to run company credit checks at the start and during the business relationship. This will help them determine how much credit they will extend to you and make sure there are no hidden red flags that could mean they would spend the whole time chasing payments from you.
If your business sells to other businesses, its common practice to credit check customers and finding out their business credit score, just like a supplier would, especially if that customer could potentially be extended credit.
To find out your business credit score, sign up to CreditFocus and credit check your business in a matter of minutes! Once you’ve done that or you already know your credit score, click here to find out how to improve your business credit score.
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