What factors affect your company’s credit ratings?

Your credit rating is an important part of maintaining and managing your company’s financial health. However, is it enough to sustain this by just knowing your credit rating? Well, it is also important to understand how it is calculated and the key factors which influence the calculation process.

There is no universal credit rating system, but rather, a system specific to each individual credit rating agency. The rating is based on a company’s overall credit history and is calculated using a complex algorithm, which takes into account a huge number of variables.

Here are some of the key factors, which affect your company’s credit rating:

• Financial history – Profitability, turnover etc.
• Current assets – Cash, inventory, short-term investments etc.
• Liabilities – Wages, taxes, purchases, loans, mortgages etc.
• Auditor’s information – Any adverse comments mentioned.
• Payment history – Outstanding debts, punctuality to make a payment.
• Age of company – An older company will have more history to assist with calculation than a newer company.
• Size of company – Larger companies are calculated differently to smaller companies.
• CCJ information (County Court Judgements) – How many? How frequently? What value? The higher the number the bigger the affect on your ratings.
• Punctuality of filing accounts – Filing late lowers your ratings.
• Director’s history – Is the director associated with a company that is bankrupt? Are there any changes within the company’s management?

I hope you find this post useful in optimising your own credit rating.

Find out your company’s credit rating now with our Standard Credit or Fully Comprehensive Company Credit Reports.

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