Business credit is an important foundation of any company. Whether you’re entering a new partnership, negotiating payment terms or looking for a business loan, credit history is often a factor. You can build your business credit by paying bills, lenders and suppliers promptly and staying within recommended credit use thresholds, while there are also many ways to undo the good work.

In this article, we discuss how to build business credit in the UK, key influencing factors and ways to achieve a healthy position to secure future funding. 

What is business credit?

Business credit is essentially your company’s track record, financial reputation and risk profile. It’s evaluated using a combination of factors, such as payment history, credit use, business structure, and more, which determine your business credit score. This ranks your risk level and creditworthiness in the eyes of lenders. 

Good business credit means you present a lower risk and will be viewed more favourably for financial products, such as business credit cards and commercial loans. Bad business credit can lead to higher interest rates from lenders, tighter payment terms and sceptical treatment from potential partners. 

Knowing how to improve your credit score is extremely handy, as you can take steps to boost your profile and make your company a more attractive prospect to lenders and suppliers.

What’s the difference between personal and business credit?

Personal credit is based on an individual’s financial activities, such as credit card use, repayment history and overall debt management. In contrast, business credit relates to a company’s financial health and trading history, including how it manages credit, pays suppliers and handles debts and tax obligations. Both help lenders assess your creditworthiness when deciding whether to offer you finance.

Establishing good business credit allows you to access funding for short- and long-term needs, from managing cash flow to supporting growth. For sole traders and startups, personal and business credit often overlap, with lenders relying more on personal credit data when there’s limited business history. For established limited companies, the two profiles are generally separate, reflecting your company’s independent legal and financial identity. 

Why is building business credit important?

Building credit for a business and improving its credit score is very important, especially for growing businesses. When looking to fund your expansion plans and make key investments, you’ll likely need external sources of finance. And many business finance lenders will assess your credit record and base approval and funding decisions on your creditworthiness and risk profile. 

While future funding is a good incentive for improving credit scores, building business credit can also help you when seeking trade agreements with suppliers, as your creditworthiness gives them confidence in your ability to make prompt payments and be a financially stable partner.  

Business credit score ranges from the major credit reference agencies

The major credit reference agencies (CRA) in the UK that provide business credit scores are Experian, CreditSafe and Equifax. TransUnion is another well-known CRA, but currently only provides personal credit scores (although it offers business-to-business commercial credit insights).

Below, we’ve outlined the typical business credit score ranges for the top CRAs operating in the UK:

How long does it take to build business credit?

Building business credit usually takes about six months to a year of financial activity. During this time, you can take actions to improve your credit score and allow credit agencies to regularly review your profile and assess your latest risk level and creditworthiness. 

There are quick-fixes and short-term measures that can help you see improvements more quickly, but this timeframe is a suitable period to demonstrate your payment history to creditors/vendors and show how you’re managing your overall finances and using credit facilities.

How to build business credit without using personal credit

In certain circumstances,  you can use your personal credit score to vouch for your business. However, in the long term, it’s important to prioritise building business credit separate from your own. Below, we’ve outlined how to build credit for a business without using personal credit in a few easy steps:

• Open a business bank account: A business bank account is used for commercial transactions, helping you keep your personal and business transactions separate, for tax purposes, accounting and building credit history. Business accounts also offer benefits like extra purchasing power, accounting integrations, cashback, plus access to other lending solutions.  
• Using other credit lines: If you have access to other credit options, tied to your company, such as business loans, insurance or overdrafts, prompt payments and regular, responsible use can build business credit independent of your personal profile – but use arranged overdraft facilities. 
• Keep clear financial records: Consistent bookkeeping and proactive accounting, including tracking expenses, will help you stay in control of business transactions and credit use, and ensure there are no gaps, inconsistencies or personal/business crossover in your records.

Common credit challenges and solutions

Building business credit is an active process that takes time and care, but with a little effort, it’s not too difficult to shape your profile and make necessary adjustments. However, there are various pitfalls to avoid, such as: 

• Reporting errors and omissions
• Late supplier or loan/credit payments
• Failing to file tax returns or pay what’s owed within HMRC deadlines
• Applying for too many lending options in a short period of time (affecting your credit score)
• Building large debt and going over the recommended credit usage levels 

CRAs look at business payment history, credit card use, credit history length, debt levels, recent credit card/loan applications, etc., when assessing your risk profile. 

Here are some best practices for avoiding these key pitfalls and common business credit challenges:

• Pay your bills and payments to suppliers and lenders promptly and within agreed timeframes
• Ensure your reporting and credit records are accurate (and seek to correct any errors if/when detected)
• Monitor your business credit score and how you’re appearing to lenders so you can identify any weaknesses in your profile
• Apply for credit/lending facilities in a measured way, always checking eligibility, avoiding hard searches (where possible), and not applying for too many in a short period
• Aim to improve your supplier relationships and potentially extend existing payment terms 
• Use credit regularly but wisely, showing responsible debt management in lending facilities and staying within appropriate credit use levels

Getting started: How to build business credit history from scratch

Good business credit is achieved over time. So, unless you’ve got a pristine personal credit score, you need to work hard to improve your record to bolster your chances of getting approved for future funding and enjoying favourable terms.

Here are the key things to do when building business credit from scratch: 

• Choose the right business structure: Having a separate legal entity for your company makes it easier to build business credit history, but it depends on your situation. If you’re a sole trader, your personal credit will be under scrutiny. If you form a corporation or limited company, personal credit is removed from the mix, unless you are also providing a personal guarantee.
• Register your business with the appropriate authorities: Once you’ve decided on your business structure and legal framework, you must register your company with Companies House and notify HMRC, where necessary.
• Get your credit profile established and tracked: To build business credit in the UK, you’ll be tracked by CRA, such as Equifax and Experian, which will automatically start credit files once you’re up and running. You can also apply for a Dun & Bradstreet (DUNS) number to start a business credit file, although registered companies based in the UK or Ireland should automatically receive one.
• Obtain a Unique Taxpayer Reference (UTR): A UTR is a 10-digit number issued by HMRC to all new companies. This is used for all tax-related matters and is essential when registering a business for tax, filing tax returns and paying corporation tax.

How to build business credit fast in 7 strategic steps

Once you’ve done the initial setup and registered with the relevant authorities, you can start building your credit history. Below, we’ve outlined 7 ways to build business credit fast and lower your risk level in the eyes of lenders and suppliers: 

1. Apply for a business credit card: When you charge your expenses to a business credit card, it keeps your dealings neat and transparent, which is important for tax purposes. Plus, it also builds your credit history. However, if you can’t keep up with payments, your credit score may be impacted.
2. Use vendor/supplier credit lines: Agreeing on a period of credit with various vendors enables you to buy goods and services and pay at a later date,  easing cash flow and helping you manage payments. These trade credit lines, in turn, help build a stronger business credit score when reported to credit agencies, so long as you pay within the relevant timeframe. 
3. Build good relationships with suppliers: Deepening and strengthening business relationships can influence your business credit score, and the better your profile, the greater confidence you’ll build with existing and new suppliers. This can lead to better terms and extended periods of credit.
4. Maintain prompt payments: Paying suppliers, lenders, and other creditors promptly is crucial and one of the best ways to build business credit history and protect your credit score. Payments made over 30 days past the due date can severely dent your profile, whereas timely payments demonstrate reliability and a commitment to meet financial obligations.  
5. Conduct efficient accounting: Ensure you file your company accounts on time and keep a clear record of your business activities. All your business undertakings should show your financial discipline and demonstrate a care for meeting your commitments.
6. Register and check in with business credit bureaus: As a legal entity with a business footprint, you’ll normally be automatically monitored. However, you must open an account to review your score. Knowing your score and monitoring movement will help you identify potential issues, weaknesses and where you can make improvements to boost your credit profile.
7. Use lending facilities wisely: Using business loans and other lines of credit and making timely repayments helps build business credit over time. But taking on too much debt puts pressure on your business, so assess affordability before applying. Also, avoid making too many credit applications in a short period, as it can imply you have financial issues, and try to stay below recommended usage levels and credit limits.

For more tips and strategies, check out our dedicated guide to improving your business credit score.

The importance of maintaining and monitoring your business credit

Checking your business credit report will help you understand your current credit status. It gives you an idea of what lenders will see and enables you to spot any inaccuracies or information gaps. Monitoring movements also helps you to identify influencing factors if your score goes up or down.

Leverage the support of free and paid business credit monitoring tools to support your efforts in building a strong business credit profile.

Using business credit monitoring tools

There are various business credit monitoring tools you can use, both from the major CRAs, such as:

• Experian Business Express – this tool lets you check and monitor your company’s credit score, track changes and receive risk/issues alerts.
• Creditsafe Business Index – a quick and easy way to get a snapshot of your business’ (and other companies’) financial standing, including credit scores, turnover, assets and payment performance.
• Tools from Equifax Business, TransUnion (Credit Risk and Affordability) and  Dun & Bradstreet (D&B CreditMonitor), which offer company credit reports, portfolio monitoring and commercial credit data to assess/track business financial health and credit profiles. 
• Red Flag Alert – primarily for insights into potential issues (red flags) about prospective customers and partners, this tool offers real-time insights and alerts for tracking and monitoring financial risks.
  

These monitoring tools will help you get an understanding of key factors impacting both your company’s credit profile and other relevant businesses, while providing usual data and insights to help you build your business credit.

Can I get a business loan with limited credit?

Yes, it’s possible to get business loans with limited credit. While credit will always be checked, low credit scores don’t automatically mean you’ll be turned down. While most banks will put significant focus on your credit score, alternative finance lenders like iwoca take a broader approach to underwriting that’s not dependent on credit scores alone.

At iwoca, we look at factors like cash flow, profitability and your overall business plan. Using smart lending technology, supported by automation and integrations, we can offer near-instant funding without the usual complex applications and paperwork associated with traditional business loans. 

So, if you have limited business credit, the doors are still open to lending options like iwoca's business loans. You can apply in minutes and borrow between £1,000 and £1 million with repayments tailored to your needs and cash flow.

Learn more about our flexible business loans for UK companies, including our quick and easy applications and approvals, and how to apply, or use our handy business loan calculator to work out your likely repayments. ^‍

Building business credit FAQS

How can I boost my business credit profile if I have bad personal credit?

If you have bad personal credit, it won’t necessarily impact your business credit. Your commercial structure and trading history partially determine how your personal credit influences your company’s credit profile. For established limited companies, they’re mostly separate, but for new businesses and sole traders, personal credit can impact your business credit profile. 

Aim to strengthen both by paying bills/invoices on time and keeping within the recommended credit utilisation levels. Also, check credit reports for errors and avoid numerous credit applications when improving your score. 

Over time, showing consistent, responsible credit use will help improve your personal credit and, in turn, support your company’s financial reputation.

Which credit agencies in the UK track business credit?

The major business credit agencies operating in the UK are Experian Business, Equifax and Creditsafe. While TransUnion is a well-known CRA in the UK, it primarily provides personal credit scores. However, you can access commercial credit insights for other businesses, perhaps those you may be liaising with for a potential partnership or trade relationship. 

Can I keep my LLC's credit profile separate from my personal credit history?

Once your limited company is registered with Companies House, it will begin to develop its own credit profile, separate from your personal one.  In the UK, business and personal credit profiles are largely treated separately. However, financial lenders may review your personal credit for certain funding solutions, especially if your business is new or has limited history, or if a personal guarantee is required. 

How can I improve my business credit in 30 days?

While building business credit is essentially a long game that requires consistency and responsible credit use and debt management over time, there are various ways to make improvements in a short period. So, if you’re wondering how to build business credit in 30 days, consider quick ways to start showing good credit use, such as setting up a business bank account, applying for a business credit card, registering with CRAs and entering Net 30 trade agreements with suppliers. 

Net 30 payment agreements are valuable for building credit, and when paying invoices promptly within the agreed timeframe (30 days), it not only helps improve your business credit score, but it can also build supplier confidence, which may lead to being offered longer payment schedules to support your cash flow needs.

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