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How to improve your business credit score

5 min read

12 June 2019

A strong business credit score is vital if you want to be eligible for the best energy deals or be approved for trade credit.

Your business credit report shows vendors, suppliers, lenders and business partners how likely you are to pay them on time. So how do you improve your business credit score?

Real Business takes a look at what a business credit score actually is, why it matters and how to increase it.

Your business credit score explained

As the owner of a small business, you’ll want to stay on top of your credit score. This can be difficult when you realise that credit agencies – such as Experian and Equifax – operate their own scoring formulas in their business credit scores and reports. Here’s how these two credit agencies calculate their scores:

Experian: Experian’s credit scoring model is Intelliscore Plus. Scores reflect over 800 variables and range between 0 and 100.

Equifax: Equifax provides three different scores: a payment index score, a credit risk score and a business failure score.

Why your business credit score matters

Anyone can check your business credit rating, so it’s good to know what it contains. And your business credit score could affect a variety of things, such as the type of energy deal you take out or your eligibility for the best energy deals.

This is hardly surprising. Energy companies will want assurance that your business will be able to pay the money it owes. To better understand this risk, they will carry out a credit check, especially if you apply for a post-pay tariff.

A UK business energy provider will often have a credit reference agency conduct the check, such as Experian or Equifax. Checks will look for recent debts pertaining specifically to energy companies.

Improve your business credit score

Business credit scores affect your eligibility for energy deals. Source: Experian.

However, if an energy company decides your credit check or payment history does not meet expectations, it may suggest you pay a deposit or install a prepayment meter. Despite being a safer option for energy suppliers, prepayment meters often cost more than post-pay tariffs.

How to improve your business credit score

Fortunately, maintaining a strong business credit score is relatively simple. In some ways, it’s very similar to keeping your personal credit score in check.

  •  Pay your business bills on time or in advance
  •  Use less than 25% of your available credit limit
  •  Open multiple credit accounts, e.g. business credit cards, loans, tradelines

There are a number of things you can do specifically to improve your eligibility for the best energy tariffs.

  •  Remain free of energy debt and focus on paying energy bills on time
  •  Check your credit record regularly and amend any incorrect details
  •  Don’t apply for too much credit

Business credit score tips

  1.  Monitor customers’ and suppliers’ credit scores to anticipate problems should their businesses struggle
  2.  Check your own score. Look at your credit score every month to avoid surprises
  3.  File on time. Submit accounts and returns on time as late filing can suggest financial problems
  4.  Be proactive. Use organisations like eCredable to automatically report on-time payments and build your score
  5.  Keep your credit utilisation ratio down. Pay your bills more than once a month to lower your ratio
  6.  Dispute errors and inquiries. If you see anything in your report that you don’t think should be there, dispute it
  7.  Stay alert. Sign up for notifications for when your company’s credit record changes in order to rectify problems quickly
  8.  Establish credit accounts with frequent suppliers to increase the number of positive payments to your file
  9.  Include positive payment experiences in your credit file. Manually add positive trade references to your company’s credit file via your credit reporting agency

To discover which energy products are right for your business, visit the Total Gas & Power website.