If you’re looking for a small business loan in Australia, the first thing you should do is get your business credit score. If you’ve reached this page you may be wondering what’s my business credit score? Do I have a good business credit score? How does a business credit score work? And can I get my business credit score free?

Read our dedicated business credit score in Australia article below to find out the answers to all of these questions and learn where you can check your business credit score free. If you are looking specifically for business credit cards go here.

What Is A Business Credit Score?

A business credit score is a numerical indicator of the financial health of your business. This indicator is used by both banks and online lenders to assess your finance application and the risk in lending to you as a business. It’s important to learn what your business credit score is so you can find the most appropriate loan provider for you. Receiving rejections from numerous loan providers not only wastes a significant amount of time but will negatively impact your credit score too.

All of the Australian banks and even online lenders in Australia recommend you check your business credit score first, with OnDeck in particular providing significant emphasis on this. 

Business Credit Score vs Personal Credit Score

In principal a business credit score works in the same way as your personal credit score but the two are independent credit assessments. It’s important to note however that many of the top online lenders for small businesses in Australia, including even Prospa, will often check your personal credit score too.

How is Business Credit Score Calculated?

If you are wondering what affects business credit scores, then this can be a wide variety of factors. A business credit score will take into account commercial indicators such as:

• Registered defaults – if you’ve defaulted on payments to suppliers this will clearly impact your business credit score. 
• Director information – Previous bankruptcies or court judgements on your directors will impact your business credit score. 
• Public Records – Just like with a personal credit score County Court Judgements and missed Tax liabilities can impact your credit score.
• How long your business has been in operation – in most cases, newer businesses are often deemed more risky than long standing businesses.
• Previous credit enquiries – how much credit you’ve seeked in the past and the types of lending solutions will change your credit score (this could be for the better as well as worse).

What’s A Good Business Credit Score?

The equifax business credit score range will rate your business credit score somewhere between 0 – 1200. A score of 0 at the lowest end of the scale and 1200 the highest business credit score. As a general rule of thumb, a good business credit score is somewhere between 622 – 725. A very good business credit score is between 726 – 832. Whilst a score of 833 and over is regarded as excellent.

Based on OnDeck’s research since September 2016, the average business credit score in Australia of all small businesses to use their ‘Know Your Score’ feature is 769 – very good!

If you want to find lenders specifically for bad credit business loans with guaranteed approval go here.

How To Improve Business Credit Score 

If it turns out you have a low credit score and you’re looking to build a good credit score, your next step should be to get a full credit report from Equifax. This is likely to incur a fee but with your full report you can understand what may be the determining factors to your credit score. For example, if there’s a default issue with a particular supplier, you can identify who the supplier is and look to remediate the issue. If the issue is resolved and the default is removed it should increase your credit score.

Just like with your personal credit score, repaying your loan obligations on time whilst reducing the credit loaned to your business will improve your credit score too. Becoming a more mature business, operating for a longer period of time and paying your suppliers on time should generally help your business credit score.

Business Loan – Credit Score Needed?

In virtually all cases online lenders will look at your credit score to get a unsecured business loan as well as your personal credit score (they may be more forgiving when there is a collateral like in asset finance, construction loans and other type of secured business loans). In fact, the only provider which prides itself on not reviewing your business credit score is Cigno – the microfinancing specialist that provides small business loans up to $10,000. For all amounts over $10,000 online lenders will be checking your business credit score.

It’s important to note however that the lending decision isn’t made purely on your business credit score. The information that is required will vary from lender to lender but generally they will be looking at your company’s cash flow, profit and loss statements and perhaps your balance sheet. Often just the companies bank statements are required for lending below $100,000 whilst loans above this amount may require more of a deep dive of your companies financial statements.

How To Check Small Business Credit Score Online Free?

The OnDeck business credit score service also known as the ‘Know Your Score’ service will help you get a free business credit score in Australia. Through a partnership with Equifax, OnDeck have created a service that isn’t only free but will leave no stamp on your credit file either. Sometimes when a credit report is run on your business it can impact your business credit score but this isn’t the case with the OnDeck business credit score service. 

On top of it being free the only information you have to provide is as follows:

• Your ABN
• Time in business
• Revenue

The service is available to all Australian businesses with an ASIC registered business name and there’s no obligation to then apply for a loan with OnDeck afterwards.

The credit score is provided by Equifax, the world’s leading credit information provider. Founded in the US it expanded into Asia Pac with the acquisition of the data analytics company Veda. It’s now the leading Credit information and analysis company for a business credit score in Australia. It’s also exactly where the online lenders will go to obtain your companies credit report when you apply for a loan.

We hope you’ve found our article on small business credit scores in Australia useful. We aim to provide you with information on what is a business credit score, what affects business credit scores and where you can get a free business credit score in Australia. We also wanted to clear up the facts on business loan credit score requirements and if online lenders will always want to check small business credit scores. For any inaccuracies or simply for more information about your business credit score in Australia please get in touch.