Much like you have a personal credit score, if you’ve been trading as a business for any length of time your business will also have a credit score.
We all know the importance of our personal credit score, yet our business credit score is an often misunderstood metric. However, it is essential to understand if you are applying for a business loan or are serious about the financial well-being of your small business.
If you don’t know your business credit score, you don’t really have a full picture of the financial health of your business.
If you don’t know the business score of your small business, don’t fret, you’re not alone. A recent survey by OnDeck suggests 90 percent of small businesses don’t know their credit rating. This means that Australia’s small businesses are essentially flying blind.
Interestingly, as you can see from the infographic below, of those who do check their rating, 80 percent have a good or better than good credit score. So, it makes sense to find out yours.
So what is a business credit score?
It is a number between 0 and 1,200 that is calculated using the information on your business credit file. Things that impact your business credit score include credit inquiries; how long your business has been in operation; commercial credit information such as defaults, judgements or administration and director information.
Any defaults and late payments may negatively affect your credit score. Another way your credit score can be impacted is if you apply for a number of loans simultaneously.
Want to know more? Check out OnDeck’s Know Your Score tool. It’s an easy, immediate way to check your business credit score. It’s free, and it won’t have an impact on your current credit score.