The SME blind spot: why it pays to know your business credit score
Many small business owners overlook their business credit score, even though it can affect access to financing, supplier terms, and growth opportunities. Understanding yours can help you strengthen your business’s position.
Despite playing a key role in funding decisions, business credit scores are still being ignored by swathes of UK business owners.
Research by money.co.uk of 1,000 SME owners found that just 55% know their business credit score. Awareness is lowest among very new businesses (42% for those trading a year or less) and long-established ones (46% for 5+ years), while those trading for 3-4 years are more likely to know theirs (67%).
It’s a worrying gap. Business credit scores affect everything from getting finance to agreeing better terms with suppliers. Yet many SME owners are missing out on opportunities — and potentially paying more than they need to — because they’re not tracking or managing this vital metric.
So, with that in mind, what exactly is a business credit score, why does it matter, and how can you improve yours?
Why your business credit score matters
A business credit score is a rating that reflects your company’s financial health and creditworthiness. It’s used by lenders, suppliers, insurers, and even potential partners to decide whether they can trust your business to meet its financial obligations.
A strong score can help your business:
Access finance at better rates
Negotiate improved credit terms with suppliers
Build credibility with potential investors or partners
On the other hand, a weak or unknown score could make lenders more cautious, suppliers less flexible, and expansion plans harder to fund. In essence, your credit score is your business’s financial reputation, and it can open or close doors depending on how you manage it.
What affects your business credit score (and how to improve it)
Many SME decision-makers don’t fully understand the factors that influence their score. But, once you know what goes into it, there are some easy steps you can take to protect and strengthen it.
Here’s what matters most:
1. Payment history
Lenders and suppliers will look closely at how reliably your business pays its bills. Late payments or defaults are major red flags. Paying invoices and loan repayments on time is an incredibly effective (and relatively simple) way to build a strong score.
2. Credit utilisation
Using too much of your available credit can suggest financial strain. Try to keep your borrowing below 50% of your credit limit where possible, as this shows lenders you’re managing cash flow responsibly.
3. Company accounts and filings
Missing deadlines to file accounts or annual returns can negatively impact your score. Submitting accurate information on time reassures credit agencies that your business is well-run and transparent. In short, lenders will know you’re not hiding anything.
4. Length of credit history
The longer your business has been trading and managing credit responsibly, the better. If you’re a new(er) company, you can start building a track record by taking on small amounts of credit and repaying promptly.
5. Public records
County Court Judgments (CCJs), insolvencies, or director disqualifications all harm your business credit score. If you spot incorrect information on your company record, contact the relevant agency to dispute it as soon as you can.
6. Credit checks
Each time you apply for finance, a lender may carry out a credit check. Too many applications in a short period can make you appear high-risk. It’s often a good idea to gauge your eligibility before applying (more on that below).
Regularly checking your score is also essential. It helps you spot errors early, track improvements, and see how lenders might view your business before you make a big financial decision.
The benefits of a strong score
Maintaining a healthy credit score does more than improve your chances of approval – it can actively save your business money.
Lenders are more likely to offer competitive interest rates to businesses with a proven record of reliability. Suppliers may extend longer payment terms, giving you more flexibility with cash flow.
And, when opportunities arise — whether it’s new equipment, expansion, or hiring — you’ll be in a stronger position to act quickly. Having a strong credit profile can give you a crucial edge.
Check your eligibility before you apply
Understanding your business credit score can make a real difference when exploring finance options.
For example, at money.co.uk, business owners can assess their business loan eligibility, without it affecting their credit score. Share a few details about your business and funding needs to view tailored loan options, compare offers, and assess your likelihood of approval before submitting an application.
It’s a practical way to take control of your financial reputation and give your business the best chance to grow.
About Joe Phelan
Joe is an experienced writer, journalist and editor. He has written for the BBC, National Geographic, the Observer, Scientific American and VICE. As a business expert, his work frequently spotlights the ventures and achievements of small business owners. He writes a weekly insight article for money.co.uk, published every Tuesday.