Accessing finance

Five Ways To Improve Your Business Credit Rating

11 November 2016
3 minute read

Alex Ivison

In the 15 years I’ve worked in credit and underwriting, there are a fair few things I’ve learn along the way. The biggest of these is that when starting up, or growing, small businesses can often make small mistakes that can cost them their credit rating, or getting the funding they may desperately need to make that next refurbishment or grow.

Liberis has helped thousands of UK businesses grow and flourish since 2007 and during that time we’ve provided over £100 million of funding to small businesses. With the alternative finance sector growing more than ever I thought I’d share my experience on the best possible way for SMEs to make sure their credit rating is the best it can be.

When it comes to ensuring small business get the funding they deserve, there are some easy wins all SMEs should know about.

1. Check your personal credit file

When applying for business credit, lenders will look at your personal credit file and your credit rating with a credit bureau such as Equifax or Experian.

You should use the likes of Clearscore and Noddle to get a monthly free credit report to understand what information these credit bureaus hold on you.

Make sure it’s accurate and that you’ve not missed any payments on your credit. Common problems that can easily be fixed include the credit bureau having the wrong current address, having products still being registered at an old address, or being behind on payments on products you had forgotten about. Another simple check is to make sure that you are showing as being on the electoral roll, and register online with the electoral commission if not, as this will help lenders confirm your address.

2. Check your business credit file too

Many people are unaware that businesses also have their own credit file. This is an important part of any lenders review and so it’s critical to be aware of its content and ensure it reflects well on your business.

Access to business credit files is relatively new, Experian offers it for £30 per month but a new tool called Handle gives you access for free for 30 days and £10 per month thereafter. We’d recommend getting access for at least one month each year to understand what a business underwriter will see when they review your business.

3. Understand your business – and have a clear business plan

When applying for credit most lenders will ask about the position of your business and how you will use the money. It’s important that you are able to tell them exactly how you run your business, what your key challenges are, and how you address them. Use this as an opportunity to tell them how great your business is. You should also have a clear plan for what the money will be used for and why they should trust you to pay it back.

4. Check your online presence

Any good business underwriter will do their research online about your businesses – so we’d recommend ensuring you’re 100% happy with your online presence.

How you appear on google searches, social media, customer review sites like TripAdivsor or Google reviews, and even Google Street View, can all be used to understand the performance of the business. Does your Twitter profile have a description? Is your address online correct? Make sure that you check this for your business and correct or respond to any problems that might come up.

5. Be honest

The most important part of applying for credit is for you to be honest about your business. It can be tempting to try to hide the bits of your business that aren’t going well, but business underwriters are thorough and one small omission can catch you out even if it’s a minor one.

Underwriters deal with businesses every day and know that no business is perfect. They’re normally positive about a business owner who knows the difficult areas of their business and is happy to share them. What do you think?

Is there anything else you would like to know about this subject? If so email and ask!


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