What is a good business credit score?

Blogs 3 Jan 2024

When it comes to managing your business's financial health, a good business credit score is an important factor to consider. In this article FSB Funding Platform explain what exactly constitutes a good business credit score and why it's important for your business.

Business owner making notes in studio

What is a business credit score?

A business credit score is a numerical representation of how creditworthy your business is and is calculated by a credit bureau based on a range of information that they have available.

Factors such as your business’ age, whether you pay your bills on time and any legal notices registered, such as a CCJ, will all have an impact on your business credit score and will show other businesses what they could expect from working with you from a financial standpoint. The better your business credit score is, the better your chances are of getting more favourable terms with suppliers and lenders, as they will see you as a more reliable customer.

As well as your business credit score, you will also have a suggested credit limit on your business credit profile. This serves as a recommendation to other businesses on how much credit they should extend to you.

What does a good business credit score look like?

Business credit scores typically range from 0 to 100, with higher scores indicating lower credit risk.

Here’s an outline of the risk levels associated with each business credit score:

  • 2 to 15 = maximum risk
  • 16 to 25 = high risk
  • 25 to 50 = above average risk
  • 51 to 80 = below average risk
  • 81 to 90 = low risk.

A credit score above 80 is considered very good and can significantly benefit your business. It allows you to access more favourable rates with lenders and suppliers, positioning your company as creditworthy. However, it's worth noting that many lenders require a minimum credit score, typically falling in the range of 45 to 50. Therefore, not having a good credit score may limit your lending options and access to capital.

Why is a good business credit score important?

A good business credit score can have a significant impact on your company's ability to access financing, negotiate favourable terms with suppliers, and even win new contracts. Here are a few key reasons why your business credit score matters:

Access to finance

When you need to borrow money to invest in your business's growth or cover unexpected expenses, a good credit score will make it easier to secure loans or credit lines with favourable interest rates and terms.

Supplier relationships

Suppliers may use your credit score to determine whether to extend credit terms, allowing you to buy inventory or services on credit. A good credit score can help you negotiate better payment terms and maintain healthy supplier relationships.

Business opportunities

Some business opportunities may require you to render for a contract. A good credit score will open doors to these opportunities, helping to demonstrate your business as a reliable partner.

Reputation and trust

A strong credit score reflects positively on your business's financial stability and reliability, building trust with potential customers, partners, and investors.

Funding made simpler

Fuel your business growth with an all-in-one funding platform for small businesses, provided by Capitalise. Apply for funding, review your financial health and check company credit scores.

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