Does Credit Score Affect Asset Finance?
03rd February 2025
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Does your business’ credit score affect your ability to secure asset finance? When applying for credit with traditional lending institutions like the big banks, you might find your credit score excludes you from accessing key finance facilities.
However, at Anglo Scottish, we have the ability to help businesses with ‘bad’ credit get access to the finance they need.
What is your business’ credit score?
A credit score is a numerical representation of how creditworthy your business is. A credit score is based on a number of different factors, such as your reliability in repaying and managing debts, previous financial history and more.
Your credit score is used to assess the risk of offering your business credit or entering into financial commitments with your business. Your credit score will therefore be a key point of reference for financial partners such as lenders, suppliers, investors and creditors.
Credit scores are calculated by credit reference agencies, such as Experian and Equifax.
Unless you are a sole trader or operating as a partnership, your business’s credit score is separate from your personal credit score.
Which factors influence your business’ credit score?
There are several factors that affect your business’ credit score, including:
- Your trading history – have you made timely payments to your suppliers, lenders or creditors over the course of your business’ lifespan?
- Turnover – have you shown your business’ annual turnover to be growing year-on-year or at least maintaining consistency?
- Profit – have you demonstrated the ability to consistently turn a profit?
- Filed accounts – Do other areas of your filed accounts, such as cash flow and liquidity ratios, demonstrate financial stability?
- Number of prior credit applications – how reliant has your business been on third-party credit in the past?
All of these factors influence your credit score.
Can I get a business loan with bad credit?
In some instances, a bad credit score makes it more difficult to apply for finance – particularly when applying at loan institutions with restrictive lending criteria. However, while finding the right business loan with a bad credit score can be more difficult, it’s certainly not impossible.
At Anglo Scottish, we work with a varied portfolio of 70+ funders, meaning we can provide a wider range of lending terms for a wider range of businesses than the big banks.
If your finance or loan application was unsuccessful with a mainstream bank, this does not automatically mean you cannot access finance with us.
How does credit score affect my asset finance?
So, though your credit score is unlikely to prohibit you from accessing asset finance through one of our lenders, it may mean, if your credit score is particularly bad, you find yourself limited to certain lending terms.
You may find that interest rates are slightly higher or you can only access shorter-term repayment schedules rather than spreading the cost out over a longer period of time.
You may also find you can only access specific forms of asset finance.
For example, bad credit scores may more heavily affect the terms available for certain forms of asset finance. Hire purchase agreements, where your business becomes the owner of the asset once the agreement is complete, may be harder to access than leasing agreements, where the asset returns to the lender on completion of the repayment plan.
Ultimately, however, this is only the case in a number of specific circumstances. We pride ourselves on our ability to democratise finance and will do everything we can to help your business get access.
Alternative finance options for businesses with bad credit
If you believe your business has a bad credit score, we always recommend checking with your credit reference agency to confirm – often, your credit score is not as bad as you might think!
If you are dealing with a low credit score, however, your business may be well-placed to benefit from specific forms of commercial finance. Secured forms of business loans are commonly issued for businesses with low credit scores, using other business assets as collateral.
Another valuable option might be shorter-term forms of commercial finance such as invoice finance. This is another common facility for businesses with lower credit scores, helping bridge short-term finance gaps and establish a more regular cash flow.
Need help securing a loan?
The best way to find out more about the finance options available to you and your business is to chat with one of our experts! No two finance applications are the same – that’s why all of our quotes are manually underwritten.
Get in touch via phone on 0191 410 4776 for a no-obligation chat with our finance team to discuss your needs, or send us an email at [email protected].
Head over to our Contact Us page for more information and alternative ways to reach us.
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