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Importance of Business Credit - What you should Know
1 year ago by Cynthia Gebeily

Importance of Business Credit - What you should Know

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Business credit is often a much overlooked concept; however, its importance is not to be underestimated. Especially for small to medium enterprises (SMEs), acknowledging your business credit may just be the lifeline you need for the long-term. As an SME, your cash-flow is of the utmost importance, thus, in order to acquire competitive business loan rates and terms from potential suppliers, having a good business credit score is fundamental.

What is a Business Credit Score?

Your business credit score is an indication of your business`s potential reliability in terms of meeting its financial obligations. It is essentially a guide to how trustworthy, robust and successful you are to instigate business with. 

Whether you getting a loan or companies are extending credit to you, your credit score could be the deciding factor of a positive or negative outcome. Your score is made up of a variety of factors; here are a few of the main aspects that could affect your rating:

  • Country of incorporation
  • Date of incorporation
  • Legal Form
  • Shareholders/Owners
  • Activity
  • Capital (if required)
  • Payment History
  • Company Size
  • External Risk Factors
  • Length of Credit History
  • Public Records (Bankruptcies & Judgements)
  • Turnover
  • Business Growth
  • Profit/Loss
  • Sector
  • Trade References

These factors are pivotal to having either a positive or negative business credit score. It is also important to note that there are different industry standards which may vary your business credit score, depending on the region you are working in.

Why do you need a Business Credit Score?

There are a multitude of reasons to why you need a business credit score, however, we can focus on a few main points:


Whether you are a SME or a large business, at some point, you may need a source of financing via a loan or line of credit. However, receiving finance may be difficult if you do not have a business credit score or you have a very low score because of a lack of data on your company being available.


If you want to do business, especially with larger companies, it is not uncommon for them to screen potential partners and vendors. How do they do this? By checking their business credit, looking for any potential risks and, furthermore, this can all be done in secret.


This factor is especially relevant for SMEs in the sense that separating your personal and business finances can help your company in the long term. If you keep these two separate you will find it easier to track business expenses, make it easier to manage your taxes and filter out any interest differentiation between business and personal. 

The importance of business credit reports is not to be overlooked and this factor of easier accounting plays an essential role. 

Additionally, if you do not separate your business credit line from your personal credit line you may be subject to add-on implications. This means that if you are relying on only personal credit to support your business and your business becomes at risk, your personal credit score will be negatively impacted.

How can you check your Business Credit Score?

There are online credit agencies that will conduct fresh and detailed reports on your company and, consequently, provide you with a report. 

Depending on how much you want to pay, you could download a report on your company, or order a fresh investigation. The company may contact you for more information if they don`t have enough to make a detailed credit analysis or if they wish to verify that the information they do have is still up to date.

The more information you provide to credit reference agencies, the more robust the credit scoring will be though credible agencies will always verify the information you provide so do make sure to be honest. If you purchase a report on your company and see that the information contained therein is incorrect, you can ask that information be corrected and/or brought up to date.

Why not search for your company now on www.cedar-rose.com and see what information we hold? You can download a database credit report for as little as €15 or if you don`t find your company listed, contact orders@cedar-rose.com to request a fresh investigation or complete our questionnaire to submit your company data for a free analysis.

  • business credit
  • data
  • credit score
  • SME
  • credit