UK Business Credit Scores recovering well post pandemic

rise in business insolvencies

The latest research from Business analysts Experian has shown that on average, UK Business are recovering well post pandemic.

The average Business credit score level has returned to the pre pandemic average of 44 by September this year. This was compared with an average score of 40 during most of lockdown.

Importance of a Business credit score

A Business Credit score is seen as a reasonably accurate measurement of a Business’s overall credit worthiness. The UK Business credit score takes in a number of factors to assess a company financial position and its level of risk.

The score ranges from zero to a hundred. The lower the Business’s credit score, the higher the risk. It is one of a number of indicators lenders and credit providers use to assess a Business’s ability to repay credit given.

Retail sector showing improvement

Looking at how business credit scores have changed by industry during the pandemic, the retail sector has navigated its way through stormy times, pivoting to digital platforms, and continuing to serve consumers despite restrictions and challenges presented by not only the pandemic, but also issues with global supply chains and labour shortages.

While credit scores in this sector are still, on average, below pre-pandemic levels, the average jumped sharply in September 2021 and now stands at 31 – a 19.2% increase compared to the same period in 2020.

The travel sector, which has been hit hardest by lockdown restrictions, has done worse. Average scores hit a new low of 30.5 in September 2021. This showed a drop of 30.7% compared to March 2020.

Looking at average scores by region, the South West has led the way. The local economy was buoyed by an influx of tourism through the summer months, averaging at 49.8 between March 2020 and September 2021.

East Midlands also performed well – averaging 45.6 over the same time period. By August 2021, organisations in the North East of England had collectively reached a business credit score of 44, matching its pre-pandemic levels, and since then improved its score to 45 in September 2021.

London businesses were least impacted by the Covid-19 pandemic, despite having the lowest average scores across the UK. Average scores remained consistent at 26 throughout the first lockdown in 2020, only dropping a single point to 25 in December. The capital remained at this level throughout the 2021 winter lockdown but has since recovered to its pre-pandemic level.

London is generally considered a start-up hotspot, so it’s likely that the average age of many of these businesses is lower than other parts of the country. More established companies tend to have a more detailed credit history, translating into a more positive credit score. understandably, younger businesses usually have lower Business credit scores.

James McGarva, Managing Director of Business Information Services at Experian, said “The UK business sector can be proud of what it has achieved over the last 18 months. Despite ongoing pressures presented not only by the impact of Covid-19, but also other well-documented macroeconomic pressures such as labour shortages and global supply chain issues, the ability of businesses to adapt has been impressive.”

“By looking at business credit scores on a national scale, we can see how many businesses’ financial circumstances are improving, presenting a lower risk for lenders and therefore enhancing their prospects of getting access to the finance they need to thrive. We would encourage all businesses to keep a check on their credit histories and take steps to improve their scores where possible.”

Businesses looking to maximise their Business credit sore are always advised to ensure their cash flow is at a peak. A competent Debt Collection service benefits thousands of UK Businesses every day.


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