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Rejected credit card applications, rocketing interest rates and hesitant business partners? Your firm has likely been flagged as a high credit risk.
Your company's credit rating is vital to its ability to function and conduct business. Anyone thinking of giving you a loan or trading with you will look not just at your company's credit file but also your own.
Use our guide to find out more about your own company's credit reputation and put yourself in a better position.
A credit file is created for any person or company who has made a credit application. You can check your own credit file for free once a year or if you have been denied credit in the past 90 days.
Whether for an individual or a business, credit files provide information that helps lenders make a credit decision. The following information will be included on both company and personal credit files:
Since March 2014 credit files have also been required to include positive credit reporting, showing payments made on time, as well as those that are late or long overdue.
Your personal file will contain:
Your company's file will contain:
The information in your credit file will create an overall credit score, ranking the credit risk of you or your business. Company credit scores are based on grades and range from a D-grade, which is where your business is classified as a high financial risk, to AAA-grade, where your company is deemed to have a strong financial capacity. There are 21 grades in total.
If you've found out your business has been flagged as a credit risk, there are a few things you can do to appear as less of a risk to lenders and improve your business's credit score:
Even if you and your company both have excellent credit ratings, it's still worth having a look through your file. Understanding what kind of activity lenders view as risky will help you to maintain that score and improve it further.
Can I check my credit score regularly?
There are online credit reporting agencies that will let you view your credit rating for a fee.
My company doesn't have a credit history, so how are we a risk?
Your credit file is designed to help creditors predict the type of customer you will be. Without any historical information this is difficult to do and could deter lenders.
I have a good credit history, so why have I been refused credit?
It's possible that you or your company have been a victim of fraud. Contact your bank and any lenders straight away.
Image: Shutterstock
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