The survey, by accountant Shelley Stock Hutter, found one company was offered no credit limit by one agency, and a limit of £50k by another. Another company was offered a credit limit of £43k by one agency, while another recommended letting it have a whopping £17.5m. Surely some mistake.
The research was conducted during October and November this year, and investigated the credit ratings and limits of 24 SMEs in a range of sectors from fashion and beauty through media and marketing, financial services and property.
At first glance it gives some weight to the instinctive feeling of anyone who’s ever tried to investigate their own credit score: that the decisions of credit agencies can resemble a financial version of quantum mechanics – with counter-intuitive rules that seem to go against the very fundamental building blocks of nature, yet without any effect on their ability to govern how things function in the real world. And you only get to penetrate the mystery by coughing up to find out more details.
Yet the credit agencies can only work with what they’ve got, and require information that’s up-to-date and accurate. And given how hard it is to get credit at the moment (and how many of the world’s current financial problems stemmed from irresponsible lending), companies really need to be going out of their way to supply that, to minimise such discrepancies.
Credit agencies are very much an unavoidable part of business today. With a poor score a business can easily find itself unable to get sufficient credit or secure the finance needed to grow their business, or unable to trade with suppliers or lease kit. The agencies are of course happy whether you go away with a glowing rating or not: they’re doing rather well out of the current economic climate, thank you very much. And you have to give them credit for that.