Business credit scores are calculated by credit reference agencies (CRAs). These agencies collect and analyse various pieces of information about your business to generate your score. 

Each CRA may have a slightly different scoring range, but the process is generally the same. They’ll gather data from multiple sources, including public records, Companies House, financial statements, and trade credit information.

The collected data is then analysed to assess your business's credit risk, and based on the analysis, a numerical score is generated. This score reflects the likelihood of your business meeting its financial obligations.

How are business credit scores calculated in the UK?

Credit reference agencies (CRAs) collect information from creditors and factor these into an algorithm that calculates your credit score. 

Each CRA uses a unique rating scale and may receive different data points. As a result, your credit score rating differs between agencies. 

A business credit is scored on a scale from 0 to 100 and can roughly be read as follows:

• 71–100 very low risk

• 51-70  low risk

• 30-50 moderate risk

• 1-29  high risk

Factors affecting your business credit score

There are several key factors that can influence your business credit score in the UK. The better you understand them, the better placed you are to manage and improve your score over time.

Years of operation

The longer your business has been operating, the more data credit agencies have to look at to assess your reliability. This is why newer businesses often have lower scores and difficulty getting funding due to limited credit history.

There isn’t much you can do about your years in operation. If you’re a new business, focus on maintaining a solid financial track record from the start. Consistency and longevity will go a long way in building trust with lenders and suppliers.

Credit utilisation

This measures how much of your available credit you’re already using. CRAs look at new lines of credit opened and the amount used in the last six months. 

Using a lot of credit signals financial strain and can negatively impact your score. The general rule is to keep utilisation below 30% to appear more stable to the CRA and potential lenders. 

Credit history length

The length of your credit history also matters. The longer you’ve been borrowing means the more information for credit agencies to assess your business’s reliability and creditworthiness.

Payment History

While timely payments to suppliers, lenders, and creditors can positively affect your score, late payments or defaults will do the opposite. To make sure your payments are on time, it’s a good idea to set up automatic payments or reminders.

Public records

Negative public records such as bankruptcies, insolvencies, or County Court Judgments (CCJs) can drastically lower your score. 

A CCJ occurs when a court orders your business to repay a debt. Not only do they increase your risk level, but they stay on your credit record for six years.

Outstanding collection amounts or failures to pay taxes within the last seven years are also major red flags for creditors. 

Financial Statements

Your balance sheets, profit and loss statements, and cash flow documents provide a comprehensive view of your business’s financial health. Accurate accounts that reflect a strong financial performance will enhance your credit score and build confidence with lenders and suppliers.