Why is my business credit score low?

Several factors can influence your company’s business credit score. Some of these factors are within your control, and some are not.

For example, a poor payment history or county court judgments against the business will mean some lenders may view your company as high risk to lend to. Other drivers can include, but not limited to, a lack of trading history, high credit utilisation, multiple hard credit searches, the higher risks of certain industry sectors, late filings and incorrect information within your Companies House filings. 

Let’s run through each of these factors in more detail, so you can understand some of the factors that may contribute to a lower business credit score – and the impact this can have on your ability to borrow.

The most common reasons for a low score

Downloading your company’s credit report and finding you have a poor business credit score can be concerning. But by understanding the key factors that impact your credit score, you can start to rebuild this score and improve your access to lending. 

Here are some of the drivers of your business credit score. Note, this is not an exhaustive list:

1. Late or missed payments

Your payment history is often the most important factor in commercial credit-scoring models. Delayed supplier invoices, missed loan instalments and default notices are all tracked by the credit reference agencies (CRAs). A high number of payment issues can be a major red flag for CRAs and lenders, hinting at poor cash flow and driving down your credit score.

2. County court judgments (CCJs)

County court judgments (CCJs) show that court intervention has been needed to recover a debt from your business. Because judgments are matters of public record, any active, unresolved or high-value CCJ signal that you’ve defaulted on paying your creditors. This greatly increases  your company's insolvency risk rating in the eyes of lenders.

3. Thin trading history

The newer your company, the less financial data you have to demonstrate your trading performance. As a new business, you won’t have multi-year balance sheets, audited accounts or established trade payment records. Without historic financial data to prove your repayment capability, the CRAs will give the company a lower baseline credit score until you’ve built up a more consistent trading history. 

4. High credit utilisation

Consistently maxing out your company credit cards, trade accounts and revolving credit lines is a major sign that you’re struggling with cash flow. A high credit utilisation ratio demonstrates that you’re using up your available credit, increasing the debt in the business to inadvisable levels. Using debt to finance routine operational expenses, rather than investing capital into growth, can be a bad sign in the eyes of lenders and the main CRAs. 

5. Multiple hard credit searches

Submitting several credit or loan applications in a short period triggers multiple hard credit checks on your profile. CRAs view sudden clusters of credit applications as potential indicators of distress, suggesting your business is desperately seeking funds to cover shortfalls. This has a knock-on effect on the health of your risk rating and credit score.

6. Industry sector risk-weighting

Some industry sectors are viewed as inherently risky. Credit scoring algorithms will factor in the benchmark default rates and economic volatility across specific sectors when rating your business. If you’re operating in high-risk industries – for example, construction, hospitality or retail – you’ll face stricter scrutiny from the CRAs and lenders. If your sector experiences tougher economic conditions (such as when we saw with hospitality during the COVID pandemic), your own company’s business credit score may suffer as a result. 

7. Overdue Companies House filings

If you fail to submit your annual accounts or confirmation statements on time, this creates immediate transparency issues. Filing delays suggest there’s poor internal governance or potential financial distress, both signs that will prompt the CRAs to downgrade your company's risk profile – until your regulatory compliance is back up to scratch.

8. Inaccurate or outdated data on file

Small errors in your company information can have a major effect on your credit score. Simple admin errors, outdated registered addresses or unlinked director histories can mean your business data doesn’t match across databases. Incorrect SIC codes can place you in the wrong sector and, therefore, the wrong risk rating. And missing or conflicting public records can create red flags, leading the CRAs to downgrade your business credit score in error.

Note: this list is not exhaustive and criteria will vary between bureaus, and this does not constitute financial advice nor is this a definitive list of criteria to help support your business credit score. These are for informational purposes only. 

When worrying about your business credit score matters

As we’ve mentioned, some drivers of your business score are within your control, and others are not. For example, risk weighting within your sector, or the age of your company, are elements you can’t influence. If you’re a new business in the hospitality or construction sectors, your credit rating might be directly impacted by trading in a higher-risk sector.

The key thing to understand is that these factors are outside your scope of influence, and that a higher risk rating in this scenario is not down to poor management on your part.

However, the business credit score you receive is likely to vary across CRAs. Each agency holds different data and weights it differently. This is why it’s sensible to request your credit score from multiple sources, so you can factor in these differences in risk ratings. 

How to see exactly what’s behind your credit rating

The metrics included in your credit report will differ from CRA to CRA. These will focus on specific financial areas like payment performance (Days Beyond Terms [DBT]), delinquency rating and listings of insolvencies or CCJs, alongside the main overriding credit score.

Make sure to download the full report for your business and to review the credit report in detail.

It’s not just about the one headline business credit score. Be aware of what’s driving your overall credit profile and get proactive about tackling any failings or poor performance.

Ways to fix a low business credit score

Your business credit score is a fundamental marker of your company’s overall performance and financial health. Receiving a poor credit score is a wake-up call that should galvanise the business into action to remedy the factors that are within your direct control. Note that this is for informational purposes only and not designed to be financial advice. This is a list of methods which may improve your business credit score. There is no guarantee that these will work but are some factors which may influence. 

Let’s look at some of the key steps you can take to improve your credit score:

1. Review your credit reports: Download your full company credit reports from the major UK CRAs (Experian, Creditsafe, Equifax, Dun & Bradstreet). Review the data, check your current scores and look for any negative drivers impacting your score.

2. Pinpoint the key negative factors: Identify the critical factors that are bringing down your rating. Focus on elements such as active CCJs, severe payment delays, high credit utilisation or overdue Companies House filing flags.

3. Dispute errors and update record: Fix any inaccurate public data by correcting incorrect SIC codes, updating outdated registered addresses, linking director histories and disputing any erroneous court judgments directly with the CRAs.

4. Build positive trade payment history: Pay your supplier invoices within the agreed credit terms to boost your Days Beyond Terms (DBT) metric and encourage major vendors to report your prompt payments.

5. Optimise credit lines: Reduce your credit utilisation by managing your use of loans, overdrafts and company credit cards. Make sensible use of this debt, without maxing out your credit, to help enhance your overall credit score.

6. Be timely with your filings: Submit your statutory Companies House accounts early to signal strong governance, and make sure all company information is regularly reviewed and updated throughout the year.

7. Monitor business credit continuously: Track your credit scores and limit changes monthly across the main CRAs. This will help you spot any sudden drops in your score and quickly take the best action to reduce your risk rating.

How Funding Circle can help you access working capital

Not all lenders are focused solely on your business credit score when reviewing a credit application. At Funding Circle, we look beyond a single credit score to measure the overall performance and potential of your business. 

We offer a mix of loans and lines of credit, helping you access the working capital you need quickly, simply and with the minimum of hassle.

Choose from:

• Business loans allow you to choose from unsecured business loans, working capital loans and government-backed loans such as the Growth Guarantee Scheme (subject to eligibility)

• FlexiPay offers you a line of credit, a helpful VISA card and costs spread over 1–12 months, with 0% interest and a flat fee from 1.99% per use.

• Cashback business credit card, a business credit card with no annual fees and 2% cashback up to £2,000 for the first six months (1% from there on)

• Asset finance to fund purchases of major business-critical assets, with deals through Funding Circle’s Marketplace panel of lenders.

Are you eligible for Funding Circle lending? 

Funding Circle helps your business grab the best opportunities, with access to working capital and growth funding at the right time.

To apply for Funding Circle finance you must:

• Be a UK limited company

• Have been trading for 1+ year

• Have turnover of £30,000+ to qualify for our Cashback card

• Have turnover of £50,000+ to qualify for asset finance

• Meet the turnover requirements for our tailored business loans

Note: Eligibility requirements vary by product. Please see our website for more information. 

Funding Circle Ltd is authorised and regulated by the Financial Conduct Authority. 

When you apply to Funding Circle, we will carry out a soft credit search to check your eligibility. This does not affect your credit score. If your application for finance is successful, we will require a personal guarantee, which may include a hard credit check.

Before applying for any line of credit or debt finance, it’s good practice to consult with your accountant and your legal adviser.

Check your eligibility today

FAQs

1. What counts as a low business credit score?

The Delphi score is the most widely used scale for business credit scores, ranging from 0 (high risk) to 100 (low risk). A score of 26-50 is above-average risk, 16-15 is high risk and 2-15 is maximum risk. 

2. Does checking my own business credit score lower it?

No. Checking your business score allows you to access your company’s current risk rating from the credit reference agency. To lower your credit score, you need to take proactive steps to reduce your risk in the eyes of the CRA and lenders.

3. Can my personal credit score affect my business’s score?

Your personal credit score only affects your business’s score if you’re a) a sole trader/partner running an unincorporated business, or b) you’re a company director providing a personal guarantee against a line of credit for your limited company. 

4. How long does a CCJ stay on my business credit file?

If you get a county court judgment (CCJ) or a high court judgment, it will stay on the Register of Judgments, Orders and Fines for 6 years. After this period, the judgment will drop off your credit report and will be spent. 

Disclaimer

22/09/26 – While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.