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Peer2Peer Finance News | November 24, 2017

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RateSetter: SMEs are ignoring their credit score

RateSetter: SMEs are ignoring their credit score
John Fitzsimons

ALMOST half (44 per cent) of small- and medium-sized enterprises (SMEs) have never checked their credit score, new research from RateSetter Business Finance shows.

The study, released on Monday, found that a further six per cent have opted against checking their score in the last year, while less than one in five (18 per cent) have checked the score in the last six months.

The peer-to-peer lender pointed out that credit scores are an integral part of establishing whether a business has a decent record of repaying debt, and have a significant impact on their chances of getting further finance.

Read more: SMEs to contribute £241bn to UK economy by 2025

Not only do they contain information on any credit a business has had in the past – and whether it was paid back – but include other potential issues like county court judgements.

However, it is not unusual for these credit scores to contain the odd factual error, which could damage an SME’s chances of accessing funding through no fault of their own.

Read more: SMEs press pause on growth plans due to Brexit

“Checking your business credit history is one of the simplest things you can do to ensure that you have the best chance of securing the finance your business needs in order to grow and become more productive,” said Paul Marston, managing director for commercial finance at RateSetter.

“Even a simple mistake in your credit history such as an incorrect address can affect lenders’ perception of your business, meaning that you’re unable to secure a loan or get good terms on credit agreements.”

RateSetter outlined a host of tips for businesses in order to ensure their credit record is as spotless as possible, which include maintaining a good trading record, ensuring your company accounts are accurate and providing customers with clear terms and conditions.

Read more: ArchOver CEO: SMEs have “wrong attitude” in eschewing finance