How UCC Filings Can Affect Your Business Credit Scores

How UCC Filings Can Affect Your Business Credit Scores

How UCC Filings Can Affect Your Business Credit Scores

If you have reviewed your business credit reports, you may have seen reference made to something called “UCC filings.”  This could be affecting your business credit score. As someone who has been involved in the fintech industry since 2007, running my own one-man sales office providing merchant financing and merchant services to small business owners, I know they cause a lot of confusion. Failing to understand them can lead to issues down the road relating to securing approval for higher quality forms of business credit.

What is a UCC filing?

A UCC filing is a legal notice a lender files with the secretary of state when they have a security interest against one of your assets. It gives notice that the lender has an interest, or lien, against the asset being used by you to secure the financing. The term “UCC filing” comes from the uniform commercial code.

What is the Uniform Commercial Code (UCC)?

The Uniform Commercial Code (UCC) was created to govern the sale and leases of goods. As the U.S. economy grew, so did the need to regulate business transactions in a uniform way. The UCC was created to standardize the process of business transactions in multiple states by creating more harmony and uniformity.

The code in general is divided up into 11 articles, each containing language over various forms of commercial transactions:

Article 1: General Provisions (contains generic interpretation language)
Article 2: Sales (refers to the sale of goods)
Article 2A: Leases (refers to the leasing of goods)
Article 3: Negotiable Instruments (refers to commercial paper and promissory notes)
Article 4: Bank Deposits and Collections (refers to banking and collections)
Article 4A: Funds Transfers (refers to bank transfers)
Article 5: Letters of Credit (refers to letters of credit)
Article 6: Bulk Transfers/Bulk Sales (refers to asset liquidation)
Article 7: Documents of Title (refers to bailment of goods)
Article 8: Investment Securities (refers to securities and financial instruments)
Article 9: Secured Transactions (refers to the legal interests of creditors in secured transactions)

What does a UCC-1 mean?

The UCC-1 protects the interests of the lender in the case of borrower default or bankruptcy, in which said asset(s)would be foreclosed on, seized or sold off. The UCC-1 is active for five years, which means that a lender will need to renew the filing to keep interests protected for loan terms extending longer than five years. Amendments to the UCC-1 might also be filed to update secured asset listings.

Your business credit report will indicate if a lender you’ve worked with put a UCC filing on your report, and whether or not it’s still there. Check your business credit scores and reports for free with a Nav account.

How a UCC filing may affect your business and ability to get business financing

If not properly managed, UCC-1 liens could delay or flat out deny your ability of obtaining higher quality forms of business financing. This is because the presence of a UCC filing on your business credit report may indicate to lenders that your business isn’t financially sound. Even if you had a previous business debt obligation that was paid in full, UCCs can stay on your report for years. Once a debt obligation is paid in full, a lot of times a lender will not terminate the lien automatically, this means that you could be closing up a financing arrangement and receive a delay or denial at the 11th hour due to the existence of UCC-1 liens that are still active.

Having a UCC filed on your business credit report can have negative effects in general on your overall credit risk, scoring and other associated risk analysis, (across all three business credit bureaus) and can even kill your chances at getting financing for your business.

The lender with the oldest UCC-1 filing position is considered to have the highest “priority” in relation to claim on the asset(s). Most high-profile lenders prefer to be in first position and thus will not file after that of another lender. Sometimes it could take one to six weeks to get the termination of the old UCC-1 liens finalized, which could flat out deny your ability to close on your financing arrangement.

As a result, due diligence should be done before you apply for financing to make sure your business has no UCC-1 filings still active for debt obligations already paid. (You can do this by checking your business credit profilewhich you can do for free on Nav.)

In addition, once a secured debt obligation is paid off, you should request immediately that the lender terminate the lien on said asset(s) through the filing of a UCC-3 form.

A final note about UCC filings

Lenders competing for borrowers might use the UCC as a marketing tool—because UCC filings are public records, lenders can use these records to find customers that are already familiar with their lending products to pitch them financing offers. Make sure to vet all prospective lenders carefully as well as understand their process of filing a UCC-1.

Remember that your ability to continue expanding your business credit profile depends a lot on how your business looks in the eyes of lenders, and this includes the presence of UCC filings on your report. It’s a heart-breaking situation to be in, where you are approved for the business loan that can fund the next big growth opportunity for your business, only to have it delayed or denied due to the active existence of old or inefficiently structured UCC-1 filings.

This article was originally written in December of 2015 and updated in May 2018.

Related Resources:

Dun & Bradstreet Paydex Score


Equifax Business Credit Report

Small Business Financial Exchange

This article was originally written on February 15, 2019 and updated on November 12, 2020.

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John Tucker

John Tucker has over ten years of professional experience in Commercial Finance and Business Development. Tucker is also an M.B.A. graduate and holder of three bachelor's degrees in Accounting, Business Management, and Journalism. To connect with John Tucker, feel free to send him a connection invite via LinkedIn at:

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38 responses to “How UCC Filings Can Affect Your Business Credit Scores

  1. I don’t have existing loan nor applied for a loan yet I saw my business credit report that I have UCC filling against my business! How is that possible? How can I find out what company or who did that? It’s freaking me out! I don’t own any loans to no one!
    I keep getting calls about approve for loans but I keep telling them I don’t need or want a loan!

    1. Flo – it’s possible your business was mistaken with another. The first thing I’d suggest is to dispute it with the credit bureau(s) that are reporting it to see if it’s incorrectly associated with your business on the report. But you may also need to try to investigate and find out whether the court where it was filed has accurate information. (It could potentially be a sign of business identity theft.) Unfortunately it is likely to take a little digging and legwork. We wrote about how to get a UCC filing removed here.

  2. What should you do if you have a cautionary UCC on your profile but no information from where it came from?

  3. I’m an independent contractor and I obtained a loan under the company for which I was associated I defaulted on the loan due medical issues. I have since opened my own company and the file has been sent to collections. They are threatening to file a UCC-1 on my business. My business was not the gurantor of the loan when the loan was granted can they file a UCC-1 on my business?

  4. Hello,
    Can a individual file a Ucc1, using a notarized promissory note? Do you have to be a licensed Lender to file?
    Example:) My Brother borrowed money from my company in the amount of 20,000. We created a promissory note and had it notarized. I’m now wanting to file it, but I wasn’t sure if I needed a lenders license to do so or can A Individual file.

    So bottoms line is the Ucc1 filing for License lenders only?

    Thank you

  5. I wanted to ask how can I submit trade payments of my vendors I have done business with to Nav, to report?

  6. My brother owners a business and wants to loan me some money.
    He wants to file a 3 month ucc1 on my personal credit reports, then amend it every month until paid off.
    Will this ucc1 filled loan increase my credit score and show good credit history?

    He will do a ucc3 thereafter to terminate loan.

    My intent is to show more positive history to obtain bank lines of credit .

    Can a ucc1 be backdated 2 yrs ?


  7. Hi

    My brother owners a business and wants to loan me some money.
    He wants to file a 3 month ucc1 on my personal credit reports, then amend it every month until paid off.
    Will this ucc1 filled loan increase my credit score and show good credit history?

    He will do a ucc3 thereafter to terminate loan.

    My intent is to show more positive history to obtain bank lines of credit .

    Can a ucc1 be backdated 2 yrs ?


      1. Do you have to have a Lenders license to do so? This is the exact thing I’m trying to do.
        Or can a individual file?

  8. Could the presence of multiple UCC filings prevent potential employers from hiring me. I’m a new grad nurse and I find myself having difficulty getting hired. I do well in the 1st interview and an offer is made for employment. Each employer promises to call with more details in a few days and then I never hear from them again. When I call for a follow up it’s always the same. They’re no longer offering me the position. They won’t tell me why and I’m at my wits end trying to figure out what is the problem. Did a background check on myself and it looks as tho I have several Or maybe just one UCC filing. Any input is greatly appreciated as I am desperate to fix the issue. Thanks

    1. UCC filings typically appear on business credit reports but not on personal credit reports. It’s possible they are showing up on a background check but I’ve never heard of UCC filings affecting an individual’s ability to get a job.

    1. A UCC filing is a public notice that identifies that you have an outstanding debt obligation. Most lenders (particularly online lenders) use this to secure a business loan. It’s sometimes called a UCC lien, or general lien, on business assets. It allows a business borrower who might not have an asset that is usable as collateral to still secure a small business loan.

  9. Can I file a UCC for my corporation to protect the EIN and also to prevent any other shareholder to obtain business credit/loan??

  10. Hello,
    I got a business loan and some how i couldn’t pay to my lender and they filed a UCC and i have few questions
    what i have to do to cancel the ucc filing ?
    my financially situation is really tough I can’t pay them what should i have to do ?
    also my personal credit score is really bad if i file bankruptcy can i ucc will be cleared ?

    1. I’m sorry to hear of the financial difficulties you are experiencing. Unfortunately you can’t cancel a UCC filing. The lender would have to release it but they aren’t likely to do so if the debt is unpaid. I think your instinct to talk with a bankruptcy attorney is a good next step. Find out what your legal options are. If it turns out bankruptcy is not a good option for you, feel free to come back and comment so we can make other suggestions. Hang in there!

  11. Would a person with multiple UCC liens on their business be able to obtain a mortgage to purchase real estate?

  12. How can I (or one of my clients) file a UCC Lien against another company for services/product rendered but yet to be paid for? I know there is Google, but is there a vetted source or link I can find out more about this?

    1. Hi Jake, it would likely be best to talk to an attorney about how to go about this. In order to file a UCC against another company for services/products rendered, you’ll need to include the right to file a UCC in your up front agreement with the company. Even then, the agreement might differ based on whether products or services are being offered.

  13. I work for a physician’s office and we have started filing UCC-1’s for 3rd party auto accident cases so the insurance company will pay our office instead of the patient. Once the account is paid in full, we terminate the lien. Will this show up on an individual’s credit report or adversely affect their credit in any way?

    1. I double checked with Rod Griffin, director of public education with Experian about your question. He replied: The only way the debt would come to an Experian credit report is if it were reported by a third party collection agency. We no longer include lien information in a consumer credit report, so it would not appear as a public record in that way. So, it should not affect the consumer’s credit history in any way.

      1. Hi my name is Mariela I have a question for you I trying to file UCC-1 my question is if I file is that going to affect my credit I have a small business, I worry about my credit cards score*
        I was going to file my school loan and I was going to file other loans they never going to get paid off the interest is so high.
        If I file ucc1 that will affect my credit can I still use my credit cards?

        1. I’m confused. A UCC-1 is filed to notify the public that you have a security interest in property. It is most often filed when your business gets a loan or lease. You wouldn’t normally file a UCC unless you are lending something to another business.

          Are you considering filing for bankruptcy? The fact that you mention that your loans are not affordable makes me think that’s what you are considering.

          1. I am trying to get a loan from the SBA and they require general security agreement and UCC filing. Will this affect my personal property? If I default could they take my personal assets? House/car? I have a painting company and do not have any business assets.

  14. I was born on Air Force base in Japan do I file in state my birth certificate filed or state I reside in?