Credit utilisation

Credit utilisation matters because it tells a lender how much headroom the business has if trading worsens. A company with a £100,000 overdraft sitting at £95,000 month after month has very little buffer for a downturn or a delayed customer payment. A company at £40,000 looks materially more resilient even if the headline facility size is identical.

Utilisation is tracked through credit reference agencies — Experian, Equifax and Creditsafe in the UK — which receive monthly data from most major lenders. A persistent pattern of running facilities close to the limit will lower the business credit score and reduce the chance of being approved for additional finance, even when the existing facility is being serviced perfectly.

Improving utilisation is one of the fastest ways to strengthen a funding application. Paying down the revolving balance for two to three statement cycles before applying often shows up in the credit file by the time the lender pulls it. Asking an existing lender for a facility-limit increase can also reduce the reported utilisation percentage without changing actual usage.