November 27, 2019Late Payments
For business owners who are looking to obtain a loan for their small businesses, checking your business credit score is a critical step in this process. Here is why.
When you apply for a business loan, the lenders take a number of different factors into consideration, this most likely will include your business credit score.
Research by OnDeck Australia found that 53% of small business owners didn’t realize that Australian businesses are subjected to a credit scoring system. Your business score can impact access to capital and trade terms with suppliers.
Your credit score can affect you for the better or worse. If you have a high credit score, lenders are willing to work with you as well as give you a better interest rate. If however, your score is lower, higher interest rates will be applied and sometimes, you may even be refused the loan.
Checking Your Credit Score
MYOB Loans’ recently relaunched it’s Know Your Score portal, which allows small business owners to quickly and easily check their business credit score.
This score is derived from your business credit file, which is maintained by reporting bureaus such as Equifax.
If you have a good record of lending and making repayments on time, you should expect a good business credit score from your credit file.
Tips For Maintaining A Healthy Credit Score
Tip 1: Make sure you know your credit scores, both personal and business, and check them regularly as they may alter when new information is obtained. If you see an error on your file, simply make a complaint with the offices to have it corrected.
Tip 2: Use the credit you need–whether with your distributors via finance services or business accounts. Your business credit profile represents how you used credit in the past, so avoiding it entirely or misusing it could make access to financing difficult for your company. Use credit as you need it responsibly.
Tip 3: Stay on top of your finances to ensure that you have enough funds to pay on time for your expenses, loans, etc. When you think you might have a cash flow problem, consider discussing your options with your accountant or broker before making late payments.