Understanding your business’s credit and the factors that affect it can feel complex, especially in situations where guidance blurs personal and company finances. This mythbuster addresses a raft of business credit misconceptions so you can make confident decisions, secure funding on fair terms, and protect your personal finances.

It's important to understand how credit scoring works, why it matters for organisations at every stage, and what ways you can build, strengthen and maintain a robust profile.

By  understanding business credit score and busting some of those business credit myths, you can focus on actions that make it easier to borrow and take your business to new heights.

This is not the case and it is one of the biggest business credit misconceptions.

Business and personal credit are distinct and typically assessed separately:

• Personal credit reflects an individual’s borrowing and repayment behaviour
• Business credit relates to a company’s financial conduct, including borrowing, supplier relationships and payment performance

Credit reference agencies and decision‑makers – such as lenders, insurers, landlords and key suppliers – may review a business profile to assess risk and set terms.

Keeping your profiles separate helps shield your personal score if your company experiences short‑term cash flow pressures and preserves business borrowing capacity as you grow.

A strong business profile may improve access to trade credit, reduce insurance costs, and strengthen your negotiating position on payment terms and pricing.

Practical steps you can take to establish and maintain a dedicated business credit profile include:

• Setting up an appropriate legal entity to separate personal and business obligations
• Opening a dedicated business bank account to ring‑fence transactions and demonstrate professional financial management
• Keeping business details – legal name, address, directors – consistent across official registers, tax authorities, banks and suppliers
• Using business credit facilities responsibly, and ask suppliers to report payment performance where possible
• Maintaining manageable balances, file accounts on time, and avoid unnecessary credit applications

This guide will help you with business planning and researching finance options: Business planning and credit

Strong business credit is just as important for sole traders and SMEs as it is for larger corporates.

For smaller firms, it can affect everyday essentials such as mobile contracts, premises leases, equipment finance and supplier terms. A healthier profile may unlock sharper pricing, higher limits and faster approvals – critical advantages when cash flow tightens or new opportunities emerge.

Benefits for smaller businesses can include : 

• Lower borrowing costs over time and access to more competitive rates.
• Improved negotiating power with suppliers and landlords.
• Greater resilience when market conditions change.
• Clear separation of personal risk from business risk.

Structured, methodical habits that can help you understand your business’s credit and may support better outcomes:

• Keeping finances organised with a dedicated business account and sound record‑keeping.
• Using business credit cards, overdrafts or trade credit prudently, repaying on time to build a positive history.
• Leveraging digital tools to monitor cash flow, forecast needs and plan repayments.
• Preparing documentation carefully and ensure information is consistent across counterparties.

Timely payments are essential, but they’re only one part of the picture.

Credit reference agencies may also consider how much of your available credit you use (utilisation), the length and stability of your credit history, company financials and filing behaviour, public records such as CCJs or insolvency events, director information, and industry‑specific risk factors.

Beyond paying on time, consider these strategies:

• Keep utilisation low – repay regularly and avoid consistently maxing out limits
• Maintain stable trading information and file accounts promptly each year
• Diversify credit types (for example, card, overdraft and trade credit) and manage each prudently
• Monitor cash flow to prevent late or missed payments during seasonal dips or rapid growth periods
• Review supplier and customer concentration to reduce exposure to single‑party risks

Building predictable patterns – such as clear repayment schedules, alerts to keep you on track, and contingency plans for liquidity – supports understanding business credit and strengthens your profile over time.

Taking a holistic approach will be more beneficial than taking narrow focus on payment timeliness alone in optimising your business’s credit score.

Security may be required. Product fees may apply. Over 18s only. Subject to status, business use only. Any property or asset used as security may be repossessed or forfeited if you do not keep up repayments on any debt secured on it. Our Trade Services Terms and Conditions are available here.

Early‑stage businesses can begin laying the foundations from day one. Clear separation of finances, consistent record‑keeping and modest, well‑managed credit usage can help establish a track record.

Even small steps – such as opening a business account, using a business card responsibly (subject to status), and working with suppliers who report payment behaviour – can start to build your profile. These are practical ways that help newer firms gain traction.

As your trading history develops, keep data accurate across official registers and counterparties, maintain disciplined cash flow practices, and avoid unnecessary credit applications. Over time, this steady approach can translate into broader access and stronger terms.

High limits are not the sole measure of creditworthiness.

Assessors look for sustainable usage, predictable repayments and quality financial information. A modest limit used sensibly can be viewed more favourably than an expansive limit that’s frequently maxed out.

Using a personal account for business activity can blur audit trails, complicate tax reporting and make it harder to evidence professional financial management.

It can also hinder credit assessors when evaluating your company’s performance, potentially slowing applications or leading to more conservative lending decisions.

A dedicated business account helps you:

• Separate personal and business finances to protect your personal credit and simplify bookkeeping
• Access integrated tools for invoicing, expense categorisation and cash flow insights
• Create a clearer financial footprint that supports credit assessments
• Make and receive payments efficiently, with reliable reconciliation processes

Getting started is straightforward:

• Check eligibility and gather documents such as ID, proof of address, company registration and expected turnover
• Apply through a digital or branch process, ensuring details match across all records
• Once opened, route all business income and expenses through the account, set up regular supplier payments and enable alerts to stay on top of cash movements

It may suit your business to consider a Business Savings account.

Demonstrating control—through budgets, forecasting and timely filings—often carries more weight than headline limits when it comes to improving your business’s access to credit.

Get help here: Take control of your business finances

Using digital tools to track inflows and outflows, setting payment reminders and aligning repayment schedules with revenue cycles can all contribute to a healthier, more resilient profile. 

Is it difficult to get business credit? It depends on trading history, documentation and clarity of financial records. New businesses can start small: open a business account, use a business credit card responsibly (subject to status), and build relationships with suppliers who report payment behaviour.

Keep utilisation modest, file on time and maintain accurate records. These habits typically make access easier as your history grows, supporting your business’s access to credit.

How quickly can a business credit score improve? Timelines vary by agency and behaviour. Consistent on‑time payments, lower utilisation, stable information and timely filings can have a meaningful effect over several reporting cycles.

Avoid abrupt changes that could signal instability.

Do director changes affect business credit? They can. Credit reference agencies may consider director information, so ensure all changes are reported promptly and that governance records remain accurate across official sources.

Remember it’s best to do as much research as you can before applying for business credit. Our credit scoring guide could help.  Download the NatWest Credit Scoring Guide here.