Securing additional finance is often essential for business investment and growth. However, lenders rely heavily on your business credit score when assessing your suitability for credit. Maintaining a strong credit profile is therefore vital.
Understanding Business Credit Scores:
A business credit score is a numerical indicator of your company’s creditworthiness. It assesses the risk associated with extending credit to your business, taking into account your credit history, payment behaviour, cash flow strength, and other publicly available financial data.
In essence, the higher your score, the lower the perceived risk to lenders.
Who Issues Credit Scores?
Business credit scores are generated by credit reporting agencies (CRAs), which collect and analyse financial information to produce a risk rating. Different CRAs apply different scoring models, with ranges such as 0–100, 0–300, or 0–1000. In Australia, Experian’s 0–100 scale is commonly referenced:
| Risk Category | Score Range |
| High Risk | 1–10 |
| High to Medium Risk | 11–25 |
| Medium Risk | 26–50 |
| Low Risk | 51–75 |
| Very Low Risk | 76–100 |
Businesses with lower scores may find it difficult to obtain finance, while those with stronger credit ratings can generally access more favourable funding options.
How to Strengthen Your Business Credit Score:
Improving your credit score can significantly enhance your ability to access external funding. Below are five effective measures to consider:
- Adhere to Payment Deadlines
Paying suppliers, service providers and lenders on or before the due date demonstrates strong financial discipline and reliability. - Keep Credit Utilisation in Check
Where revolving credit facilities are in place, aim to use a modest proportion of the available limit. High utilisation rates can be interpreted as financial stress and may negatively affect your score. - Build Trade Credit Relationships
Negotiate trade credit terms with key suppliers and meet those terms consistently. Timely trade credit payments help build a positive payment history, especially important for newer businesses. - Monitor Your Credit File Periodically
Review your business credit report from providers such as Illion or Equifax to identify and rectify any discrepancies or adverse entries. Regular monitoring supports more effective credit management. - Avoid Defaults and Legal Filings
Defaults, court actions, and insolvency proceedings can severely impair your credit standing. Taking proactive steps to avoid these issues is essential for maintaining a healthy credit score.
Accessing accurate credit reports and maintaining oversight of your business’s financial position can make a significant difference when applying for finance.
Contact us to discuss how we can support you in monitoring and improving your business credit score through tailored advice and reporting solutions.
