how a ucc filing affects credit scores
like individuals most businesses have a credit report and score while a ucc lien will appear on a business credit report it won t necessarily have an immediate negative impact on the business credit score unless the business should default on the underlying loan the loan attached to the ucc filing will also increase a business credit utilization ratio which if it gets too high can negatively impact the score furthermore the business won t be able to use the same piece of property as collateral for a different loan if there is a lien attached to it example of a ucc 1 statementsay a construction company named alex s excavation applies for a business loan to purchase two new hydraulic excavators bank xyz is interested in offering alex a loan and as part of the contract it files a ucc 1 shortly afterward alex s excavation loses one of its biggest construction contracts and then another and the company is forced to file for bankruptcy because the company had several lenders it s likely that bank xyz would not be given first order rights to alex s property and would have to wait until all other lenders were paid however because the bank filed a specific collateral lien on the two excavators it received the property cash mentioned in the ucc 1 statement in a timely fashion 