If the bank says NO, DFS can get you a YES!
The health of your business is vital for its continued success long into the future. One of the markers of your business health is your business credit score. Now, while your company credit report doesn’t always reflect how things are for you at the present time, it does provide valuable insight as to what your strengths and weaknesses have been in the past as a business and provide guidance on how you can strengthen your business.
To find out how to unlock business success by checking and boosting your credit rating, read our brief guide, below.
Just as your personal credit score (or credit rating) is a numerical reflection of your conduct when borrowing and repaying money, so too is your business credit score — just for your business! Also, similar to personal credit scores, business credit scores range between 0 and 1,200, depending on the credit bureau. However, business credit scores are different from personal scores, as they don’t include the same personal information that is used to calculate an individual’s credit score.
There are many different pieces of information that go into determining credit scores. Credit reporting agencies rely on the information on your business credit file to determine your credit score, including:
Typically, a ‘good’ business credit score is one between 625 – 725. A score that lands between 725 – 825 is generally considered ‘very good’, and scores above 825 are deemed ‘excellent’.
Credit reports play an important role in business finance, as they provide credit providers insight into whether a business or company is going to be a credit risk, or whether they can confidently lend money to them. Therefore, in order to unlock business success, business owners should check their credit report often to get an insight into their company’s financial health and check whether there are any discrepancies on the report that could work against them when they apply for finance in the future.
The primary two benefits of maintaining a sound business credit score are:
1) Suppliers are likely to give you more favourable payments terms
2) Lenders are more likely to approve applications for credit and capital
What happens when a credit reporting agency has information listed incorrectly against your legal entity or directors? Well, just as with personal credit scores, any information that’s recorded by credit bureaus that is incorrect can have a massive impact on your business score!
More importantly, any credit inquiries that you don’t recognise could also indicate that someone is fraudulently using your business details to obtain finance using your company information. Maintaining vigilance over your business credit report and file can help protect your credit score as well as your business identity!
If you’re relatively new to business, it might surprise you to learn that suppliers and vendors may perform a soft pull credit check on your business before entering into agreements. This helps other companies determine if your business is high or low risk to take on as a customer. This is another reason to ensure that you maintain the financial health of your business as best you can, and know what’s on your credit file so that you can discuss any concerns with potential suppliers and vendors.
Credit reporting agencies in Australia are legally required to provide you with a free copy of your business credit report once every three months. There are three main credit reporting agencies where you can get your free credit score:
Business owners can approach a credit reporting bureau directly to check their business credit score, and access information that’s listed on their business credit report. Gaining insight into your credit history can also help you understand what decisions to make in the future to keep improving your credit score — such as what type of finance to apply for!
If your track record doesn’t support a strong business credit score, but you’re in a position where you need to apply for a credit product, then there are a few things you can do to help improve your business credit score, and therefore your chances of accessing the business finance that you need:
As one of Australia’s fastest-growing specialist private lenders and finance broking firms, Diverse Funding Solutions is well-positioned to help Aussie businesses access the finance solutions they need — even with low credit scores. With access to over 200 of Australia’s top private lenders, we can help businesses manoeuvre around credit checks, to keep their business moving forward while they work on building their business credit score up.
To learn more about how DFS could help your business, reach out to our friendly team.
