We get many questions about creditworthiness. Sometimes, the callers have been rejected by the bank or perhaps lost a tend. It is not Lenders Credit that decides who will receive loans, but we at credit are capable of calculating risk levels for companies and individuals. To help companies that have or are at risk of getting worse credit ratings, we’ve compiled our five best tips!
How do I improve my credit rating at a start-up company?
New start-ups generally have a higher risk than others. It often takes longer to establish yourself than the plan says. Therefore, be extra careful about your payments. If you are late with a payment and it ends up at Kronofogden, it can hit hard on the company’s credit rating. This also applies if you would receive a payment note in private.
Get help from an accounting firm and make sure you submit your financial statements on time. And be sure to have a hefty buffer when starting your business.
How do I find out my credit rating?
It is not credit that decides whether you can buy on credit, so does the lender or supplier. But many use credit to determine the risk in a company. Therefore, in order for you to be able to trade on invoice or on credit with your company, it is important to keep track of the risk class. The same is true if you participate in public procurement. Then it is common to require a risk class of at least 3. The easiest way to find out the credit rating is by purchasing a credit report at your company. You can easily buy it online on our website.
Then you get a summary of the information we have about your company and also what risk class the company has received. Risk class 3-5 indicates good risk class. Risk class 1 and 2 signal increased risk. If you have a different form of company than a limited company,
I have not received a risk class at my company. How is it that?
A common explanation is that your company has breached the auditor’s scrutiny. The basic rule according to the Swedish Companies Act is that a limited company must have an auditor. But it is possible to register a reservation (exception) if it is entered in the articles of association and that it is registered with the Swedish Companies Registration Office.
The exception from the auditor can be obtained if a public limited company does not reach up to two of the values below for each of the last two financial years:
• more than 3 employees (on average)
• more than USD 1.5 million in total assets
• more than USD 3 million in net sales
More and more limited companies are gaining a reservation, but then growing to exceed the rules. Thus, they have to get an accountant, but many fail to do so. In those cases, we at Lenders Credit cannot give the company a risk class, as the company is in principle liable to liquidate. So our best tip is to get an accountant! Read more at the Swedish Companies Registration Office.
Risk class deteriorated, nothing negative has happened in the company?
If your company should have received a payment note or if the entire board resigns, it is easy to understand that the risk class is deteriorating. But if there is no such obvious explanation, we need to take a closer look at your company.
It may be that someone on the board has declared a lower income, taken many loans privately or jumped off the board in another company. If your company has previously been on the verge of a lower risk class, small degradation can cause the company to cross the threshold to a lower risk class.
Can many credit applications lead to a lower risk class?
At Lenders Credit , we collect a wealth of data about companies and individuals. We weigh all the data against each other to predict the risk of the company going into insolvency. We look at a wealth of data such as financial statements, key figures, payment notes, age and how the Board looks.
One factor we look at is the number of times someone has taken a credit report on your business. We have seen a connection between how active a company or a private person is in seeking credit and the risk that the lender will not get paid. This is especially true in combination with other changes. For example, we see that if the company has been almost inactive for a long time and suddenly seeks a number of credits, the risk of insolvency increases. There is a lower risk in companies where the number of credit requests is more constant, especially in combination with continuity of the board and good financial key figures.