Small business credit score: what it is and how to boost yours

Published Friday 3 October 2025

Table of contents

• What is a business credit score?
• How are business credit scores calculated?
• What is a good business credit score?
• Business credit score vs personal credit score
• How to get a good business credit score
• Keep your business credit score healthy
• Manage your cash flow to protect your credit score
• FAQs on business credit scores

Key takeaways

• Monitor your business credit score 3-4 times per year through free reports from Experian, Equifax and TransUnion to spot problems early and correct any reporting errors.

• Maintain at least 30 days of operating expenses in your business account and set up automated payment systems to ensure you never miss bill payment deadlines, as payment history is the most critical factor affecting your score.

• Keep your credit utilisation at 30% or lower of available credit limits to maintain a healthy business credit score across all credit agencies.

• Communicate proactively with suppliers before cash flow problems arise, as they are more likely to work with you and avoid negative credit reporting when you address issues upfront.

What is a business credit score?

A business credit score is a number that shows how reliably your business pays its bills. Lenders and suppliers use it to decide if you are likely to pay on time.

A good business credit score opens doors

• get more favourable payment terms and higher credit limits from suppliers
• access loans and credit at lower interest rates

You can also check other businesses’ credit scores to see if they are likely to pay you on time.

How are business credit scores calculated?

Business credit scores are calculated using your payment history and financial behaviour, though each credit agency uses different methods. This means you'll have multiple scores that may vary between agencies.

Key factors that affect your score:

• Payment history: Your track record of paying bills and debts on time
• Credit utilisation: How much credit you're using versus what's available. To maintain a healthy score, it's best to keep this at the recommended rate of 30% or lower.
• Public records: Information from Companies House, court judgments, and insolvencies
• Business age: How long your company has been operating
• Industry risk: Some sectors are considered higher risk than others

Score ranges vary by agency:

• Some use 1–5 scales
• Others use 1–100 or 0–999
• Higher scores always mean better creditworthiness

What is a good business credit score?

Good business credit scores vary by agency, but here's what to aim for:

Experian (0-999 scale):

• excellent: 881–999
• good: 721–880
• fair: 561–720
• poor: 0–560

Equifax (1-5 scale):

• excellent: 5
• good: 4
• fair: 3
• poor: 1–2

What this means for your business:

• get the best rates and terms with a good or excellent score
• most lenders and suppliers accept fair scores
• you may need to provide deposits or guarantees with a poor score

Focus on keeping your score above the bottom quarter of any scale.

Business credit score vs personal credit score

Your business credit score is separate from your personal credit score. Your business score is based on your company’s financial history, such as how you pay suppliers and use company credit. It is often publicly available.

Your personal score is based on your own finances, such as your mortgage and credit cards, and is private. If you are a sole trader, lenders may look at both scores.

How to get a good business credit score

Many business leaders are unsure how to improve their business credit score. Here are some tips to help you build a strong score and look reliable to lenders and suppliers.

1. Review your business credit score regularly

Check your score three to four times a year to spot problems early. You can access your business credit score through:

• get free credit reports from Experian, Equifax and TransUnion
• use paid monitoring services for detailed reports and alerts
• check if your business bank offers credit monitoring

If your score drops unexpectedly:

• contact the credit agency to ask about any score changes
• check for reporting errors, disputed payments or outdated information
• request corrections for any mistakes or unfair reports

2. Pay bills on time

Most of your business credit score will come down to on-time payments.

• Set up a good accounts payable system, so you know when bills are due
• Use accounting software to automate payments, so you don't forget
• Keep an eye on cash flow, so you can see if you're going to struggle to make payments
• Be aware that big companies and utilities are more likely to report you for late payment

3. Be upfront if you're having cash flow issues

If you are having cash flow issues, contact your suppliers and explain the situation. They are more likely to work with you if you let them know when you can pay.

Keep your business credit score healthy

Your business credit score directly impacts your ability to get financing and favourable supplier terms. While the calculations are complex, protecting your score is straightforward.

Your credit score action plan:

• Check regularly: Monitor your score 3-4 times per year
• Pay on time: Set up automated payments and cash flow alerts
• Maintain cash reserves: Keep at least 30 days of expenses in the bank
• Communicate proactively: Contact suppliers before payment problems arise

Manage your cash flow to protect your credit score

are the biggest threat to your business credit score. When you run out of money, you miss payments and your score suffers.

Protect your cash flow:

• set shorter payment terms for new customers and longer terms for established ones
• use accounting software to automate payment reminders and track overdue invoices
• set minimum balance alerts to avoid running low on cash
• plan major expenses for times when your cash flow is strongest

Key cash flow rules:

• keep at least 30 days of operating expenses in your account
• invoice as soon as you deliver goods or services
• follow up on overdue payments within seven days
• offer early payment discounts to encourage faster payments

Try Xero for free to automate your cash flow management and never miss a payment deadline again.

FAQs on business credit scores

Here are answers to some common questions about business credit scores.

How long does it take to improve a business credit score?

There is no set timeline, but you may see improvements in a few months if you pay bills on time and manage your debts. Building a positive history takes time, so keep good financial habits.

Does checking my business credit score affect it?

No, checking your own business credit score is a ‘soft’ check and does not affect your score. Review it regularly to spot errors or areas for improvement.

What if my business is new and has no credit history?

New businesses start with a neutral or empty credit file. Register with credit agencies, pay your bills on time and file your accounts with Companies House promptly. Some suppliers may also report your payments, which helps build your score.