In the earlier years of a business, the owner’s personal credit score if often used to support a business’s financing application. But as the business enters into more credit transactions, it starts build a business credit score.
Let’s get into it!
What is a business credit score?
It is a metric that gives a picture of how credit-worthy a business is. The SME Credit Score put together by Transunion gives an indication of likely a business is to fail. A lower score means the higher the likelihood of business failure within the next 12 months.
How do I know what the score is for my business?
Obtain a business credit report from Transunion or through the Funding Hub. Links provided below.
Business Credit Reports
What should I look out for in the credit report?
The credit report contains the following sections:
- Full business registration details
- Civil court records
- Any default information on missed payments
- Confirmed company banking details
- Property and bond information for the business
- Enquiry history in the last 3 years
- Trade references
You want to check the information reflected about your business in each of these sections for accuracy. If you pick up something that is not correct or should not be there, take responsibility to correct the information. Remember, this is what your potential financiers might be looking at, so you want to make sure it’s correct!
What is a good score?
Credit scores range between 0 and 100 with 100 representing least risky and 0 most risky. Ideally, a business should strive to attain and maintain a score above 75 to appeal to financiers.
In our final blog on funding this month, we’ll give you links to a variety of small business financiers.
