Just 2 out of 5 financial decision makers in UK SMEs have ever checked the business’s credit report, a survey by Experian has found.
Of these, 44% checked their report more than 6 months ago and ‘curiosity’, rather than wanting to improve their access to credit, was the main reason for doing so.
The survey also found that just 13% were ‘completely aware’ of the factors that influence their credit score. Only 39% of micro firms, those with 0-9 employees, have checked their credit report.
Many SMEs wrongly thought that certain factors would have an adverse effect on their credit rating:
- regularly using an overdraft (17%)
- making employees redundant (9%)
- having more than 5 credit-card holders in the company (3%).
Similarly, many incorrectly identified criteria they thought could positively influence their rating:
- a healthy bank balance (49%)
- paying bills before due date (21%)
- taking on more employees (5%)
- moving into bigger premises (2%).
Experian’s managing director of SME business, Ade Potts, said:
“A business credit score forms a key part of the decision making process for lenders, service providers and many businesses. Whether a small business is applying for finance with a lender, credit with another business, competing for a supplier contact or simply trying to get a good deal on their business mobile contract, they need to understand that their business credit score will play a role.”