How to Improve Your Business Credit Score: Unlock Better Loans & Lower Rates

Strengthen your business credit score for improved financing and growth opportunities.

Did you know business owners who understand their credit scores are 41% likelier to secure financing? Just by improving a single number, you get the power to access better loans, lower interest rates, and flexible trade agreements.

Your business credit score is your ticket to growth. A strong score means easier access to funding, reduced borrowing costs and enhanced trust with lenders and suppliers. It’s the foundation of financial stability for your business.

In this guide, we’ll explain everything you need to know about improving your business credit score. From actionable strategies to common pitfalls to avoid, we’ll provide you with the insights and tools needed to strengthen your financial foundation. Whether you’re looking to secure funding, enhance cash flow, or grow your business, it all starts with building a great credit profile.

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How to Improve Your Business Credit Score: 11 Key Steps to Boost Your Rating

Improving your business credit score is important for establishing trust with lenders, securing favourable loan terms, and achieving long-term financial stability. Here are the top strategies you can start implementing today to boost your business credit score:

1. Register and Verify Your Business with Credit Bureaus

Want to build trust with lenders and suppliers? Start by registering your business with the UK’s major credit bureaus. It’s the first step to creating a strong credit profile and opening doors to better financial opportunities. 

Getting listed with credit bureaus is the foundation of your financial reputation. Accurate information helps lenders and suppliers evaluate your business, giving you a head start in building trust and creditworthiness.

a. Experian and Equifax – Is Your Business Listed?

Experian and Equifax collect data from public records and trade accounts to create your business credit report. Make sure your details are accurate:

• Experian: Use their Business Express Service to monitor your credit profile.
• Equifax: Access your credit report to verify and update your information.

b. Monitor Regularly to Stay Ahead

Once registered, keep an eye on your credit reports. Errors can hurt your score, so fix inaccuracies quickly. Use tools like:

• Dun & Bradstreet Credit Monitoring.
• Experian Credit Reports.
• Equifax Business Credit Solutions.

2. Set Up a Strong Business Foundation

A strong business foundation is essential for financial stability and a high credit score. A strong foundation isn’t just a box to tick, as it proves your reliability to lenders and suppliers. With the following steps, you can boost your business’s financial credibility and set the stage for better funding opportunities.

a. Choose the Right Legal Structure

Your business’s legal structure impacts liability, taxation, and creditworthiness. In the UK, common structures include:

• Sole Trader: Simple, but personal liability for all debts.
• Partnership: Shared ownership and liabilities.
• Limited Liability Partnership (LLP): Partnership flexibility with limited liability.‍
• Private Limited Company (Ltd): A separate legal entity that protects personal assets and boosts credibility.

Most lenders and suppliers prefer a Private Limited Company (Ltd) due to its transparency and limited liability. Register your business with Companies House to get started.

b. Obtain Your Unique Taxpayer Reference (UTR)

HMRC assigns every UK business a Unique Taxpayer Reference (UTR)—a 10-digit number required for:

• Corporation Tax
• Value Added Tax (VAT) registration
• Pay-As-You-Earn (PAYE) schemes

Registering for a UTR ensures compliance with tax obligations and is a key step toward financial stability. Visit gov.uk for more details.

c. Open a Business Bank Account

Keeping personal and business finances separate is essential for accurate financial tracking and credit-building. A business bank account:

• Builds trust with lenders and suppliers.
• Provides a clear record of financial transactions.
• Simplifies tax reporting.

Many UK banks offer tailored business accounts, with some providing free banking for startups. Research options that suit your needs.

d. Register for VAT (If Required)

If your taxable turnover exceeds £85,000 (2024 threshold), you must register for VAT. Voluntary registration can also:

• Boost your business’s reputation.
• Allow VAT reclaim on purchases.
• Demonstrate professionalism to partners and suppliers.

Complete your registration through HMRC’s VAT online services.

e. Keep Accurate Records

Consistent and accurate records are critical for managing cash flow, ensuring compliance, and building a positive credit profile. Best practices include:

• Tracking income and expenses.
• Keeping business information consistent across registrations and credit bureaus.
• Using financial management tools for streamlined record-keeping.

3. Build Trade Credit with Suppliers

Building trade credit with suppliers is a smart strategy to strengthen your business credit score. Strong trade credit shows lenders you’re reliable. By managing supplier credit effectively, you’ll improve your score, build trust, and unlock better financing opportunities.

a. Set Up Trade Lines

Start by building relationships with suppliers who offer credit terms:

• Find Suppliers with Payment Options: Look for net 30, 60, or 90-day terms to manage cash flow while building credit.
• Open Credit Accounts: Share business details like registration documents and trade references when applying.
• Verify Reporting: Ensure your suppliers report payment data to bureaus like Experian, Equifax, or Dun & Bradstreet. If they don’t, your credit activity won’t count.

b. Pay on Time—Every Time

On-time payments are key to a strong credit score:

• Pay Early: Meet payment deadlines to avoid late fees and build a positive history.
• Use Payment Tools: Automated reminders or accounting software can help you stay on track.
• Communicate Challenges: Facing cash flow issues? Let your supplier know early. Transparency prevents negative reporting.

c. Diversify Your Credit

Working with multiple suppliers strengthens your credit profile:

• Expand Vendor Relationships: Partner with suppliers from various industries to show creditworthiness across different sectors.
• Keep Accounts Active: Use your credit accounts regularly—dormant accounts may close and stop contributing to your score.

d. Track Your Trade Credit

Stay on top of your credit activity to maximize its impact:

• Monitor Reports: Regularly review credit reports from Experian, Equifax, and Dun & Bradstreet to ensure accuracy.
• Stay Within Limits: Avoid maxing out credit limits. It signals financial stability and responsible borrowing.

4. Obtain and Responsibly Use Business Credit

Are you looking to build trust with lenders and boost your credit score? Responsible use of business credit is the key to unlocking better financing terms and enhancing your business’s credibility. It boosts your score but, more importantly, it builds trust with lenders and suppliers. A strong credit profile opens doors to better financing, lower interest rates, and long-term growth opportunities.

a. Get a Business Credit Card

A business credit card is a credit-building powerhouse. Here’s how to make the most of it:

• Separate Finances: Keep personal and business expenses apart for cleaner records and better credit protection.
• Build Your Credit History: Regular use and on-time payments directly improve your credit score.‍
• Enjoy Business Perks: Access rewards, cashback, and travel benefits tailored to SMEs.

Pro Tip: Choose a card that reports to credit bureaus like Experian or Dun & Bradstreet. Compare fees, interest rates, and rewards to find your perfect match.

b. Secure Loans and Lines of Credit

Adding diverse credit sources strengthens your profile:

• Business Loans: Ideal for big-ticket investments like equipment or expansion. Timely payments build credibility.‍
• Lines of Credit: A flexible option for managing cash flow or unexpected expenses. Keep usage responsible to boost your score.

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c. Manage Credit Like a Pro

How you manage credit is just as important as having it. Stay on top with these tips:

• Pay On Time, Every Time: Late payments hurt your score. Always meet deadlines, even for minimum amounts.
• Keep Credit Utilization Low: Aim to use less than 30% of your available credit to show financial stability.‍
• Monitor Your Accounts: Regularly review your credit accounts to ensure they still meet your needs. Be cautious about closing older accounts—they help your score.

5. Review Business Credit Reports Regularly

Frequently checking your business credit reports is a proactive step to ensure financial health and prevent surprises. By understanding and managing your credit profile, you position your business for better growth opportunities.

a. Check Your Reports Frequently

Stay informed about your credit profile:

• Access Your Reports: Obtain detailed credit activity reports from services like Experian, Equifax, or Creditsafe. Tools like Experian’s Business Express simplify the process.
• Set a Schedule: Aim to review your reports quarterly to identify errors, spot trends, and maintain data accuracy.

b. Fix Errors Quickly

Errors can damage your credit score, so catching and addressing them promptly is critical:

• Look for Red Flags: Outdated information, incorrect payment records, or unfamiliar accounts need immediate attention.
• File a Dispute: Contact the relevant bureau with supporting documents to resolve discrepancies.
• Follow-up: Ensure your credit report reflects the corrected data.

c. Know What Impacts Your Score

Understanding key credit factors enables better decision-making:

• Pay On Time: Timely payments show reliability.
• Limit Credit Utilisation: Keeping usage below 30% of your limit demonstrates financial responsibility.
• Avoid Public Records: Negative entries like CCJs can significantly impact your score.

6. Maintain Low Credit Utilisation

Your credit utilisation ratio—the amount of credit you’re using compared to your total available credit—is a major factor in determining your business credit score. Keeping it low shows lenders you’re financially responsible. By staying under 30%, borrowing wisely, and implementing these strategies, your business can boost its credit score and unlock better financing options.

a. Keep Utilisation Below 30%

• Stay Under 30%: If your credit limit is £10,000, aim to use no more than £3,000. This shows lenders you’re managing your finances well. 
• Avoid High Utilisation: Using more than 50% of your limit signals financial strain and can hurt your score. 

b. Avoid Overleveraging

• Borrow Smart: High utilisation raises red flags for lenders and can lead to higher rates or rejected credit. ‍
• Check Your Debt Regularly: Review obligations to ensure they’re manageable and align with your business goals.

c. Smart Strategies to Keep Utilisation Low

• Request a Higher Limit: Boosting your credit limit lowers your utilisation ratio—just don’t increase your spending. Stay mindful of potential credit checks. 
• Pay Early: Paying balances before your statement date reduces what’s reported to credit bureaus.‍
• Spread Expenses: Use multiple accounts to keep utilisation low on each. Be cautious to avoid fees or over-complicating your finances.

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7. Separate Personal and Business Finances

To simplify accounting and build credibility with lenders, keep your personal and business finances separate. It’s a foundational step for building a strong credit profile, securing financing, and setting your business up for sustainable growth.

a. Use Dedicated Business Accounts

• Open a Business Bank Account: Separate accounts streamline bookkeeping and show lenders you’re serious. Many UK banks offer features like expense tracking and accounting software integration.
• Get a Business Credit Card: Use it to manage business expenses and build credit. On-time payments and low balances boost your credit score.

b. Be Smart with Personal Guarantees

• Know the Risks: Personal guarantees can secure financing but expose your assets if your business defaults. Weigh the pros and cons.
• Limit Guarantees: Explore financing options that don’t require guarantees to protect personal assets.
• Ask an Expert: Seek advice from financial or legal professionals before agreeing to terms.

c. Keep Records Clean

• Use Accounting Software: Tools like QuickBooks or Xero make tracking income, expenses, and cash flow effortless.
• Review Regularly: Check financial statements often to track performance and prepare for taxes.

d. Understand Legal and Tax Implications

• Choose the Right Structure: A limited company separates personal and business finances and provides liability protection. 
• Stay Tax-Compliant: Clear separation simplifies tax reporting and ensures you can claim allowable deductions. 

8. Establish Trade Credit Relationships

Strong trade credit relationships build trust, improve cash flow, and strengthen your credit score. By paying on time, securing references, and monitoring reports, your business is better positioned for growth and financing opportunities.

a. Negotiate Favourable Terms

• Start Small: Ask key suppliers for modest credit limits with shorter terms to build trust. 
• Show Reliability: Consistently place orders and pay on time to secure better terms over time.

b. Pay On Time—Every Time

• Stick to Deadlines: Late payments hurt your credit and supplier relationships. Pay on or before the due date. 
• Automate Payments: Use accounting tools to schedule payments and avoid missing deadlines.

c. Request Trade References

• Ask Suppliers for References: Once you’ve proven reliability, request trade references for loan or credit applications.
• Verify Reporting: Ensure suppliers report payment activity to credit agencies like Experian and Creditsafe. 

d. Monitor Credit Reports

• Stay Updated: Check your trade credit reports regularly to spot discrepancies and track your progress.‍
• Fix Errors Quickly: Resolve inaccuracies with the reporting agency or supplier immediately.

9. Use Credit Monitoring Tools and Services

Credit monitoring services provide real-time insights to help you stay ahead of potential risks and safeguard your business credit profile. These tools enhance your ability to spot and respond to issues efficiently.

a. Get Real-Time Updates

Stay updated on your credit activity:

• Receive Alerts: Monitoring tools like those from Creditsafe provide notifications about changes to your credit profile.
• Spot Unauthorised Activity: Early detection helps protect against fraud or errors.

b. Leverage Credit Monitoring Platforms

Go beyond credit reports with tools designed for continuous oversight:

• Integrated Solutions: Many platforms combine credit monitoring with fraud protection and detailed reporting for streamlined management.
• Subscription Services: Choose subscription plans that match your business needs for consistent access to credit data.

c. Prevent Fraud and Errors

Monitoring services make it easier to detect and mitigate risks:

• Identify Red Flags: Unauthorised accounts or unusual credit inquiries are potential warning signs.
• Take Immediate Action: Monitoring tools enable swift responses to prevent long-term impacts on your credit profile.

10. Maintain Accurate and Up-to-Date Business Information

Is your business information working for you? Accurate, consistent details build trust, boost your credit profile, and keep lenders confident in your reliability. Let’s ensure your records are doing their job.

a. Update Records with Official Bodies

• Companies House: Keep your registered address, director details, and other essentials updated. Lenders and CRAs rely on this data for assessments.
• HMRC: Ensure your VAT registration, tax records, and corporation tax information are accurate. Mistakes can impact compliance and creditworthiness.

b. Stay Consistent Across Platforms

• Business Directories: Make sure your business name, address, and contact details match everywhere. Inconsistencies raise red flags.
• Online Presence: Align details on your website, social media, and listings to strengthen credibility.

c. Notify Key Partners Quickly

• Suppliers and Clients: Keep them informed about changes to avoid disruptions and maintain trust.
• Financial Institutions: Update banks and lenders to ensure your records are accurate for credit assessments.

d. Monitor Public Records

• Credit Reports: Check reports from agencies like Experian and Creditsafe regularly to spot errors. Fix them promptly.
• Legal Filings: Stay on top of judgments or liens. Resolving these fast protects your credit profile.

11. Limit Credit Applications and Manage Credit Utilisation

Too many credit applications or high credit usage? Lenders see this as a red flag. Keep things under control to protect your credit score and secure better financing.

a. Limit Credit Applications

• Space Out Applications: Applying too often triggers multiple hard inquiries, lowering your score and raising lender concerns.
• Be Strategic: Research lenders before applying. Target those where you’re likely to qualify to reduce unnecessary inquiries.

b. Keep Credit Utilisation Low

• Stay Under 30%: Use no more than 30% of your available credit to show responsible management. For example, if your credit limit is £10,000, keep balances below £3,000.
• Boost Limits Wisely: Request higher credit limits only if you can manage the additional credit responsibly.

c. Monitor Balances Regularly

• Track Usage: Review account balances frequently to keep your utilisation ratio in check.
• Set Alerts: Use credit monitoring tools to get notifications when you’re nearing your target utilisation.

d. Pay Off Balances Promptly

• Pay On Time: Late payments hurt your score—always pay in full and on time.‍
• Tackle High-Interest Debt First: Focus on paying down high-interest accounts to reduce financial strain and improve your overall utilisation.

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Key Takeaways for a Stronger Business Credit Score

A strong credit score isn’t built overnight. By committing to these practices consistently, you’ll maintain a solid credit profile that supports growth and opens doors to better financial opportunities. Here’s a quick recap of the essential steps:

• Pay On Time: Never miss a payment. Consistency shows reliability and keeps your credit score healthy.
• Monitor Your Credit Reports: Stay on top of your credit profile by regularly checking reports for errors or updates.
• Keep Credit Utilisation Low: Stick to using less than 30% of your available credit to demonstrate financial discipline.
• Apply for Credit Strategically: Avoid frequent applications and focus on lenders where you’re most likely to qualify.
• Keep Business Information Current: Accurate, consistent details across records build trust with lenders and suppliers.
• Build Strong Supplier Relationships: Positive payment histories with suppliers help enhance your credit profile.
• Separate Business and Personal Finances: Dedicated business accounts protect your credit and keep things professional.

Building and maintaining good business credit takes consistency, but the benefits are transformative. Imagine easier loan approvals, lower interest rates, better deals with suppliers, and enhanced trust from partners and investors. A strong credit score positions your business as reliable, stable, and ready to scale.

At FundOnion, we make your financial journey easier. Our platform connects you to tailored funding solutions in just 90 seconds, helping you strengthen your credit profile and unlock growth opportunities. 

Start your funding journey with FundOnion today—because your business deserves the best opportunities to thrive.

FAQ's

1. How can I improve my business credit score if I’m just starting out?

New businesses can build credit by establishing a business bank account, registering with credit bureaus, and applying for a business credit card. Prioritise timely payments and work with suppliers who report to credit agencies to start building a positive credit history. Over time, these habits create a solid foundation for your credit profile.

2. How does filing full accounts instead of abbreviated accounts improve my business credit score?

Filing full accounts offers greater financial transparency, which lenders and credit agencies value. A detailed view of your company’s financial health can positively impact your credit score, making your business more attractive to lenders and suppliers.

3. What is considered a good business credit score in the UK?

In the UK, a business credit score above 80 is typically viewed as excellent, signalling low risk to lenders. Scores between 40 and 80 are considered moderate, while anything below 40 may indicate high risk. Monitoring your score and maintaining good financial practices can help you reach and sustain a strong rating.

4. How does the length of my credit history influence my business credit score?

A longer credit history provides credit agencies with more data to assess your financial reliability. Consistently managing credit responsibly over time demonstrates stability and boosts your credit score. Newer businesses can focus on timely payments and building positive credit habits to establish a solid history.

5. Can I dispute errors on my business credit report, and how does that affect my score?

Yes, disputing inaccuracies on your credit report is crucial. Errors like misreported payments or outdated information can lower your score unfairly. Contact the credit reference agency with supporting documents to correct these issues promptly, ensuring your credit profile accurately reflects your financial health.

6. How do trade references impact my business credit score?

Trade references from suppliers can enhance your credit profile by demonstrating a history of timely payments. Positive references signal reliability to lenders and credit agencies, improving your score. Encourage suppliers to share payment data with credit agencies for maximum impact.

7. How can I improve my business credit score while keeping credit utilisation low?

To improve your score and maintain low credit utilisation, aim to use less than 30% of your available credit. You can achieve this by paying off balances early, spreading expenses across multiple accounts, or requesting a higher credit limit—but only if you can manage it responsibly.