If you’re trading as a building and construction limited company, the financial health of your business can significantly impact your operations and growth. Your business credit score is a key measure of your financial health and is how other businesses will view you. Similar to your personal credit score, your business credit score plays a significant role in determining your financial credibility.

We explore five ways your business credit score can impact your business. By understanding these factors, you can take proactive steps to improve your creditworthiness and safeguard your future growth.

1: Companies credit checking your firm

Maintaining a good business credit score enhances your reputation in the eyes of potential customers and partners. When businesses consider entering into contracts or partnerships, they will often perform credit checks to assess the financial stability of their prospective partners.

A good credit score indicates that your building and construction business is reliable and financially trustworthy, increasing the likelihood of securing valuable partnerships and contracts.

Check your business credit score (limited companies only)

2: Your credit limit (with suppliers and building merchants)

Building merchants play a vital role in the construction industry by providing materials, supplies, and equipment on credit. Your business credit score impacts the credit limits extended to you. A good credit score allows you to access higher credit limits, enabling you to purchase the necessary materials, equipment and supplies, without straining your cashflow.

With a good credit score, not only will you be able to access an extended credit limit, but you will also be able to negotiate more favourable terms. This includes the possibility of obtaining longer payment terms, such as 30, 60, or 90 days, which can have a positive impact on your cash flow.

Top tip: as well as improving your credit score, you can also improve your credit limit with our Credit Review Service. This could allow you to unlock thousands of pounds in 0% working capital with every single supplier for your construction and building business.

Check your company’s credit limit (limited companies only)

3. Access to funding and affordable rates

Accessing funding is crucial for the growth and expansion of your building and construction business. Whether you need funds for new projects, equipment purchases, or operational expenses, lenders consider your business credit score when assessing your application. A good credit score shows the lender that you are creditworthy and that there is less risk in lending to you, so it increases your chances of securing business loans or lines of credit.

A good credit score will also help you access the best and most affordable interest rates, saving your business significant amounts of money in the long run.

Check your eligibility for funding

4. Qualification for contract tenders

Many construction projects require a competitive bidding process, and your business credit score can impact your eligibility to participate. Some contracts may have specific financial criteria that contractors must meet, including a minimum credit score threshold. By maintaining a good business credit score, your business can qualify for a broader range of tenders, expanding your opportunities for new projects and revenue streams.

A good business credit score will set you apart from competitors and increase your credibility, allowing you to secure valuable contracts that can drive your business to new levels of growth and success.

Check your business credit score (limited companies only)

5. Equipment and machine hiring limits

Construction projects often require specialised equipment and machinery that may not be available in your own inventory, so you may need to hire equipment from rental companies. However, your business credit score can affect the extent to which you can access and rent the necessary equipment. A good credit score can increase your chances of securing favourable rental terms, including larger equipment selections and more flexible rental periods. This allows your business to meet project demands without restrictions and can be crucial in maintaining efficiency and meeting deadlines.

Check your company’s credit limit (limited companies only)

Tips on how to improve your business credit score

To get a good credit score, you’ll need to take a couple of key steps.

1. Start by checking your business credit score and monitoring it regularly. This will allow you to spot any errors or fix any behaviours that could be dragging your credit score down.
2. Check the credit scores of the businesses you work with. The financial stability of the businesses in your supply chain can have a significant impact on your own business. By credit checking the businesses you work with, you’ll be able to spot risks to your cashflow, such as a declining payment performance or legal notices from your customers. This will ensure you’re ahead of late payment risks before they’re a threat.
3. Have your credit score reviewed. Credit bureaus assess your business credit score based on public information, such as your filed accounts, but this is not always an accurate reflection of your business. Using our Credit Review Service, you can provide updated information to Experian (the credit bureau used by 90% of lenders and suppliers), in 96% of cases we are able to improve your credit score and credit limit.

Your business credit score can have a significant impact on your business. Start checking your credit score today to set your business up for success.