checking business credit score

The one number your business doesn’t know

Over 90% of businesses haven't checked their business credit score, which means they're effectively flying blind.

While awareness of personal credit scores has been rising in Australia, business credit scores – yes, there are credit scores for business – are still woefully ignored by Australian small businesses. According to research from MYOB and small business lender OnDeck, 93% of businesses have never accessed their score.

Cameron Poolman, CEO of OnDeck, says the issue is awareness.

"I noticed that when the consumer credit scores became available. At that point, I thought small businesses really didn't know it either and it’s just something where there just hasn't been the level of awareness in Australia that there has been, for instance, in the US, where FICO is a well-known score that people know."

Cameron Poolman

CEO - OnDeck

At OnDeck, we're trying to build people's awareness.

But what is a business credit score? What do you do if your score is low? And importantly, how do you find out your score?

What is a business credit score?

It is a number between 0 and 1,200 that is calculated using the information on your business credit file.

veda business credit score

Source: Veda

How is it different from a personal credit score?

According to Poolman, a business credit score doesn't include the personal information that is used to calculate individual credit scores.

"A business credit score has got more of the commercial information, such as registered defaults, potential loan inquiries or any external administration that may be registered against the business, so it’s very much the commercial and business attributes of the business," he said.

However, there are some similarities.

"In the same as in the personal space, without any positive credit reporting, it almost accentuates the negative. And so, it is quite difficult to get to build your credit score up again once you've got a negative listing or your score has dropped because you're not getting that positive reporting coming through to increase it," he said.

What impacts a business credit score?

Your business credit score is calculated using the information listed on your company credit file. This information includes:

  • Credit enquiries. Your business credit shopping patterns and the type of credit you've applied for can increase your credit score.
  • Time in operation. A newer business may be deemed riskier than a business that has been incorporated a longer time.
  • Commercial credit information. Defaults, judgements, court writs and external administration
  • Director information. Court judgements, bankruptcies, defaults, external administration segments that are listed on a director's file.
  • Personal Property Securities Register (PPSR). Details of any PPSR registrations held on a business are listed in your file.
  • Company details. This includes the company structure, legal entity name, business address, directors, shareholders and more.
  • Information on the public record. This can include recorded liens, lawsuits, judgements or delinquent taxes.

veda business credit summary

Source: Veda

What can damage your score?

Business defaults and late or missed payments are some of the main contributing factors to a low score.

"Another way the score could be impacted is just by the quantum of applications for credit that you've made," said Poolman. "So if you are asking for credit from a large quantum of different institutions, that will have a negative impact on your score."

What else do lenders look at when considering you for a loan?

The criteria for business loans, and what information will be considered, varies greatly from lender to lender.

"If it's a secured loan, they're looking at the securities that the person has provided, and that might be over particular assets, it could be the business, or it could be the person's home that they're lending against. What's also important is the cash flow."

"We will look through, in detail, a company's cash flow and determine its ability to service the loan that they're looking to get. Other funders will look at profit and loss statements, balance sheets, tax returns. It’s different for different funders."

What should you do if your credit score is low?

Poolman's advice to any business that has a low credit score is to order a copy of their business credit report, which they can get for free directly from a credit bureau.

"Once you get that report, you know if it's a default issue. So if I a supplier has defaulted you, you know who it is, and then you could determine whether you're able to settle that issue and then remove that from your file, which will generally increase your score."

Where can you get your credit score?

You need to pay to receive your business credit score directly from a credit reporting bureau, such as Veda, but OnDeck allows small businesses to receive their credit score for free.

Get your business credit score from OnDeck

Poolman believes that more and more small businesses will be looking to access their credit score because of its importance when applying for loans.

"I think in time, consumers, as well as small businesses, will become more aware of their credit score because it impacts their ability to access credit."

"We want to be at the forefront of different opportunities to help small businesses. We'd say this is one way of doing it."

Was this content helpful to you? No  Yes

Related Posts

More great ideas from finder.com.au

Get a life insurance quote
Get a life insurance quote

Find out what it costs to protect yourself and your family

More info...
Refinancing home loans
Refinancing home loans

Choose from offers with rates as low as 3.39% p.a.

More info...
Google Pixel
Google Pixel

Compare plans for Google's flagship Android phone

More info...
Christmas ideas
Christmas ideas

Visit our Christmas homepage for gift ideas, markets, travel & deals

More info...

Ask a Question

You are about to post a question on finder.com.au

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Disclaimer: At finder.com.au we provide factual information and general advice. Before you make any decision about a product read the Product Disclosure Statement and consider your own circumstances to decide whether it is appropriate for you.
Rates and fees mentioned in comments are correct at the time of publication.
By submitting this question you agree to the finder.com.au privacy policy, receive follow up emails related to finder.com.au and to create a user account where further replies to your questions will be sent.

Ask a question
feedback