What is a Commercial Credit Score?

06 March 2018 Amelia Henderson Best practices

A commercial credit score, also known as business credit score, takes into consideration many factors that make up a company’s financial history. This includes their repayment history and performance, bankruptcies, legal filings against the company such as CCJs and other more general details such as the type and size to the company, and how long it has been operating.

Read on to find out more about Commercial Credit Score, or click here to learn about the DueDil Credit Risk solution

Why is your company’s commercial credit score important?

It is vitally important for companies to have a healthy business credit score as it shows other companies that it’s reliable and financially stable, and therefore an attractive business to work with.

If a business has a poor commercial credit score, they are likely to find it more difficult to raise finance for the business or find companies willing to trade with them, and may be offered very high interest rates by banks and other creditors.

How to improve your company’s commercial credit score?

There are a number of steps you can take to improve the commercial credit score of your business, which include:

● Keeping your company information up-to-date: To avoid potential clients evaluating your business with incorrect information, ensure that your business information is accurate and up-to-date across all major credit bureaus.
● Agreeing a credit agreement with third parties: To build up your business credit rating, ask your suppliers if you can set up a trade credit agreement where you can pay them after they have delivered goods/provided the service.
● Ensuring your business avoids any negative public records: Bankruptcies stay on your record for up to ten years, and CCJs will remain for up to seven years. These act as black marks on your record and will likely discourage other companies from wanting to work with you.
● Paying your creditors punctually: Missing payments or paying your creditors late can have a negative impact on your commercial credit score, so make sure you pay what you owe swiftly.

Why should you check other companies’ commercial credit score?

If your business is looking to begin working with a new client or supplier, it’s essential that you conduct a business credit check to understand who you’re working with, protect yourself from late or non payments and learn their payment patterns.

Business credit score is a vital component of a company credit report as it determines the likelihood that a company will collapse in the next 12 months, which is especially important if you are intending to sign a long-term contract with a third party.

How DueDil can help

DueDil provides an end-to-end solution that allows you to price risk effectively, approve more new customers and monitor your existing customer and suppliers.

DueDil enables you to access official documents or custom reports for auditability and export complete business credit reports which include credit ratings and CCJs, ensuring complete confidence in your credit decisioning process.