Entrepreneurs are being encouraged to change their behavior towards finances and get a fresh insight into their creditworthiness, after it was found over half of small businesses fail to check their commercial credit report.
A total of 59% of financial decision makers at established small and medium sized enterprises (SMEs) admit they never check their credit score, which could lead to draw backs when they need to access costs and spending.
Leading global information services company, Experian, have developed a new credit comparison tool to tackle this issue and urge SMEs to recongnise that knowing their credit score is important for the overall financial health of the business.
Ade Potts, managing director, Experian, said: “Good credit lines can be vital lifeblood for SMEs, in particular, and one of the main advantages of knowing your Experian Credit Score is that you will see what lenders are likely to think of your personal creditworthiness.
“Lenders can take company directors’ personal credit histories into account when little information is available on a new business.”
The new Experian tool, CreditMatcher, matches you to products that fit personal financial situations, without registering the applications or searches on a credit record and offers a comparison service that gives people access to deals on credit cards and loans they’re more likely to be accepted for.
Experian data has found that nine out of 10 (88%) of firms working from a small office or home are created with less than £10,000 worth of fixed assets, and many upfront costs are unavoidable such as a laptop or phone.
Mr Potts added: “Each time you apply for credit, a hard search is recorded on your credit report. Multiple applications can damage your score and are visible to potential lenders, who may view these as a negative factor when assessing applications.
“CreditMatcher leaves a soft search which lenders cannot see. So, searching and comparing credit products doesn't affect your creditworthiness in any way.”