Credit where it's due


Credit where it's due

You don't need this blog to tell you that credit is hard to get hold of. However, you may find it interesting to know that depending on which credit reference agency your lender uses determines how much - if any - credit you can have.

According to a survey by accountants Shelley Stock Hutter, the creditworthiness of a business can vary wildly. Apparently one company was given no credit by one agency yet received a limit of £50,000 by one of the others.
To illustrate the point further, a second company was offered a limit of £43,000 by one of the agencies whilst an alternative credit agency said that the company could have a limit of £17.5 million. 

The reason for the wildly varying ratings? The information available and agency processes. Every credit agency has it's own method of processing information.
Whilst there is little that you can do about the processing of the information, there are steps that you can take to improve the quality of information used:

You need to keep up to date with Companies House filings as they're an indicator of how the business runs itself. Also, consider making sure that the company's net worth is positive - consider leaving some profit in the business.
Ensure that the business sticks to paying suppliers within the agreed terms as any negative information such as County Court Judgments will only ever count against you.
Lastly, it helps if borrowings are recorded accurately - loans and overdrafts are different and each have a distinct effect on the creditworthiness of a business.

This was first published in December 2010

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