Building credit is a smart business decision

As a business owner, you have much to think about on a daily basis, so it’s no surprise that credit isn’t always top of mind. But companies with strong business credit profiles can reap many benefits, including easier access to finance to fund investments and a credible reputation with potential customers, suppliers and lenders.

When a business checks another company’s credit profile to help with decision-making, they can do so via publicly-available records at Companies House or use a Business Information Provider that provides scores and ratings to evaluate a business’ credit worthiness.

Your business credit profile plays an important role in how your organisation is perceived. Here are some helpful tips for building a good business credit strategy, and how it can help make a positive impact on your business reputation.

Create a consistent identity

For a business to be viewed as a professional entity, it’s important to have a consistent identity. This means using the same business name, address, and phone number on all correspondence including invoicing and marketing materials. Doing so will also help separate personal from business identity, and help other organisations to keep more accurate records on your business.

Pay your bills on time

Paying bills on time can be the cornerstone of building good business credit, and keeping credit balances low or paid off also can have a major impact on the quality of business credit scores. Companies may be more willing to work with businesses who have a history of conservative borrowing.

Monitor credit ratings on your business

Business credit ratings can change overnight, therefore it can be crucial to keep track of these changes and take the appropriate action if anything is amiss. Business credit monitoring tools can issue automatic notifications about changes to scores and ratings.

Expanding your business credit profile

Once business credit is established, profiles can be expanded to include credit accounts from various types of lenders. For example, most businesses start off with a personally guaranteed business credit card. If you make timely payments and build a good credit profile, next steps could be to apply for business credit cards based solely on your business’ credit, or apply for credit with a bank or alternative lender.

The more diverse a business’ credit profile, the better the credit score can be. Building a business credit profile is no small task, but the positive impact it can have on company reputation cannot be underestimated.

Tim Vine, Head of UK Trade Credit at Dun & Bradstreet

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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