Business credit score at ‘maximum risk’

[Babysittingquestion]

I can’t find anything beyond ‘how to build your credit score’ online so I’m wondering if anyone can help before I call Experian tomorrow (I’m quite an anxious person and will be worrying about this all night!)

So I recently applied for a business flexi-loan to manage cash flow due to repeat late payments. The company is profitable and we’re on our second year in business as an LTD (I was a sole trader before).

I applied because my bank told me I was eligible, after a week and being told I was eligible I was declined with no reason as to why. I went through Iwoca.

I’ve just looked at my business credit score and it says ‘maximum risk’. I am really confused and panicking about it. I have never taken out business credit, don’t have a business overdraft or taken out any business loans before and I pay suppliers on time though I don’t have any direct debits.

My personal credit score is good and I’ve never missed a personal credit card payment or anything like that.

There’s barely any information on Experian except saying I have two searches on the file which just says ‘web enquiry’.

I am really confused about what this means and how this could affect my business.

Any insight will be very helpful, thank you.

We used to subscribe to a service where we got credit ratings for businesses and it was based on things like your balance sheet/accounts/company worth.

It's most likely because you've only been in business for two years and so you're still considered a significant risk simply based on that

Just seen you are only in your 2nd year as limited. Going limited automatically increases your credit risk as when you are a sole trader debtors can pursue your personal assets.

It is late, (in my world) I am tired, I will be succinct, you are an unknown quantity.

You're only in your second year as a limited company so lenders see this as a new business. Your time as a sole trader counts for little (well, if you had a terrible personal credit score it would count against you, but a good personal credit score doesn't count for you).

Compare your situation to a 19 year old individual (second year as an adult who can take out loans). Lenders will lend them a little, but these days they're not going to lend them large sums. They need to build their credit score, usually at a high interest rate. Once they show they are responsible after a few years lenders will allow them to borrow more.