Do UK credit checks affect your credit score?
Business credit checks work in two directions. Just as you may wish to verify the creditworthiness of another business you are looking to enter into a relationship with, other businesses will want to check your credit score. This is all an effort for businesses to feel confident that they will be paid back in a timely manner. Chasing debtors constantly or not being paid back at all is bad news for your business. Hence, credit checks are there to reassure you.
Here at Creditserve, we provide packages of UK credit checks for businesses across a diverse range of sectors. With our gold package UK credit checks, you get unlimited access to business credit reports in the UK and Ireland for up to 12 months.
Why do businesses need credit?
Businesses tend to prefer credit because when a customer pays you with a credit card it will be deposited into your business account in 24 hours, hence improving your cash flow. If you deal with clients who don’t use credit cards, you could be stuck in a cycle of chasing bounced invoices and this will affect your business.
What are hard credit checks?
When you apply for credit or to use certain services as a business, a 'hard' credit check assesses your credit report and may impact your credit score. A credit check enables the lender to see how much credit you currently have on your books and your credit history to make a judgement on the probability of you paying them back.
Equally, you may see it fit to conduct a hard credit check on new customers. This will allow you to decide whether they are financially in good shape and can be relied upon to fulfil their payments to you.
Performing lots of hard credit checks in a short timeframe will affect your credit score
However, other customers will be able to see how much credit you are taking on from how many credit checks have been conducted in your business. You must bear in mind that lots of credit checks in a small timeframe can negatively affect your credit score and cause it to lower. Applying for too much credit too frequently will be seen as a red flag to your future customers.
How do you get a high business credit score?
Paying your customers and suppliers on time, not applying for credit endlessly, and ensuring your personal finances are in good shape as back up are great ways to keep your business credit score high.
Here at Creditserve, we also know that carrying out credit checks is essential for mitigating risks and really knowing who you are entering into business with.
In addition, anti-money laundering checks are vital to delving deeper and figuring out whether a new business you will be dealing with is or has been involved in money laundering or illegal financial activities. At Creditserve, we also offer AML checks, and you can buy a pack of 250 AML searches with us.
Can you get a business loan with a bad personal credit score?
Some business loans require a personal guarantee, which is usually the director. In such cases, lenders consider the personal credit of the director/s offering the personal guarantee as well as the business’s current credit situation. In short, it can be trickier to secure a business loan if the director has a poor personal credit score.
Working with overseas companies and need to conduct credit checks? We’ve got you covered since we also offer international company credit checks here at Creditserve.