You might know your personal credit score, but are you also keeping tabs on your business score? If you will be looking to finance any business equipment or assets in the near future, your first stop should be a quick health check on your company credit rating. If it’s not up to snuff, this score could greatly affect the amounts you can finance and the interest rate you will pay.
The good news is, there are a number of things that can be done in advance to improve your score, so there are no unpleasant surprises from your finance company. If you are proactive with this check-up and give yourself plenty of time for corrective actions, you can pre-empt any barriers to achieving your business goals.
Your business credit score takes into account factors such as debt and plans in place for decreasing, average number of days your company takes to pay suppliers, length of credit record and gross revenue trending over time. The score is a numerical value and is calculated by three main credit reporting bodies in Australia: Equifax, Illion, and Experian.
It’s healthy for your business to keep an available line of credit to be used for equipment that is necessary to achieve your goals, but unaffordable to be purchased outright. Generally, a finance partner such as Interlease is your friend and can help you grow your business and positively contribute to your business credit file, which serves to open up your future financing options and more favourable interest rates.
Paying all of your bills on time is essential to building an excellent credit rating and consistency is key. So, if your company hasn’t placed a high value on payment deadlines, now is the time to turn this around and make it a hard and fast rule.
A large number of unsuccessful credit applications is detrimental to your rating, so if you have been rejected a few times in a row, this is a flag that you need to address immediately. First, stop applying for credit for a while and ask us at Interlease for specific feedback on why you were not approved. Then take a bit of time to work on correcting these negative factors working against you before applying again.
It’s important to check your business credit file and rating monthly. Sometimes there are mistakes and these can be reversed, but only after investigation by the main credit agencies and this takes time. Don’t get caught out!
When you do need a bit of finance, you will want to be prepared and ahead of the game, by building a top-notch credit file and keeping your score at a healthy level.
To check your business credit file, you can visit one of the key Australian Credit Reporting Bodies: