Business credit score: What it is and how to improve yours

Published Monday 26 January 2026

Table of contents

• What is a business credit score?
• Why your business credit score matters
• How business credit scores are calculated
• How to check your business credit score
• What is a good business credit score?
• How business credit differs from personal credit
• How to improve your business credit score
• Keep your business finances on track
• FAQs on business credit scores

Key takeaways

• Monitor your business credit score regularly by requesting reports from Equifax, Experian, and illion to identify errors and track your financial standing, as this score directly affects your access to funding, supplier terms, and business partnerships.
• Prioritise paying all bills on time as this is the most critical factor in your credit score calculation, and set up automated payment systems through accounting software to avoid late payments that can damage your rating for years.
• Maintain strong cash flow management by improving collections, setting clear invoice payment terms, and keeping cash reserves to cover essential payments during tight periods.
• Communicate proactively with suppliers before payment due dates when facing financial difficulties, providing specific payment timeframes and following through on promises to maintain trust and prevent credit score damage.

What is a business credit score?

A business credit score is a number that shows how financially responsible your business is. It gives lenders, suppliers, and potential partners a quick idea of how likely you are to pay your bills on time. Think of it as a financial report card for your business.

Unlike a personal credit score, your business credit score is often based on your business’s payment history with suppliers and lenders, as well as public records. A strong score can open doors, while a lower score may limit some of your options.

Why your business credit score matters

A business credit score is a numerical rating that shows how reliably your business pays bills and debts. A good score signals to other businesses that you're financially trustworthy.

Benefits of a good business credit score:

• Better supplier terms: Access to extended payment periods and trade credit
• Improved lending access: Higher loan approval rates and lower interest rates
• Stronger partnerships: Other businesses are more confident working with you

A strong score builds trust and gives you more flexibility to grow your business.

How business credit scores are calculated

Business credit score calculation uses proprietary algorithms that vary between credit bureaus. Your business will have multiple scores from different agencies, each using their own formula.

Common factors that influence all business credit scores:

• Payment history: How consistently you pay bills on time
• Credit utilisation: How much available credit you're using
• Business age: How long your business has been operating
• Public records: Court judgements, bankruptcies, or tax liens. For example, the Australian Taxation Office (ATO) may disclose business tax debts over $100,000 that are more than 90 days overdue to credit reporting bureaus.

Credit scoring companies collect data from multiple sources:

• Collection agencies: Track businesses that miss payments or default on debts
• Government records: Access public filings from ASIC, ATO, and court systems
• Bank information: Monitor business banking patterns and credit applications
• Supplier reports: Receive payment behaviour reports from vendors and creditors

Your credit score might be on a scale of one to five or zero to 100. The higher your score, the more reliable your payment history appears to lenders and suppliers.

How to check your business credit score

Checking your business credit score is a straightforward process. In Australia, there are three main credit reporting bureaus that calculate business credit scores: Equifax, Experian, and illion.

You can request a copy of your business credit report directly from these agencies. Some may offer a free report, while others might charge a fee.

Reviewing your report regularly helps you understand where you stand and spot any errors that could be hurting your score.

What is a good business credit score?

Good business credit score ranges:

• Excellent (80–100): Best terms and easy approval
• Good (60–79): Standard business relationships
• Fair (40–59): May need deposits or shorter terms
• Poor (0–39): May find it harder to secure credit or partnerships

Focus on keeping your score above 60 rather than chasing a perfect number.

How business credit differs from personal credit

While they serve a similar purpose, business and personal credit scores are not the same. Understanding the difference is key to managing your finances effectively.

• Information used: Your business score is based on your business's financial history, like payments to suppliers and business loans. Your personal score is based on your personal financial behaviour.
• Public access: Business credit reports are often publicly available for a fee, whereas personal credit reports are private.
• Impact: Your business's legal structure can determine if your personal credit is linked. For sole traders, the line can be blurry, but for companies, they are usually separate. This separation is clear for structures like a proprietary company, which the Australian Securities and Investments Commission (ASIC) defines as a business with no more than 50 members that cannot offer shares to the public.

How to improve your business credit score

Improving your business credit score is possible even without knowing exact calculation methods. Focus on the key factors that all credit bureaus consider when rating your business.

Here are proven strategies to strengthen your credit profile:

Pay bills on time

Pay bills on time is the most important factor in your credit score. Late payments can damage your rating for years.

Action steps to ensure timely payments:

1. Set up payment systems: Use accounting software to track due dates automatically
2. Automate where possible: Schedule recurring payments for utilities and regular bills
3. Monitor cash flow:Review your cash position weekly to avoid payment delays
4. Prioritise major suppliers: Large companies and utilities report late payments most frequently

Monitor your credit report regularly

If your score drops, contact the credit bureau as soon as you can. Ask them to explain the reason for the change.

Common causes and solutions:

• Data errors: Request correction if information is wrong
• Disputed payments: Provide evidence if you withheld payment for valid reasons
• Incorrect reporting: Challenge any inaccurate supplier reports

Maintain good cash flow management

Strong cash flow is essential for maintaining good credit scores. Poor cash management leads to missed payments and score damage.

Key cash flow strategies:

• Improve collections: Set clear invoice payment terms and follow up on overdue accounts
• Use accounting software: Track accounts receivable and automate payment reminders with online accounting
• Set cash reserves: Maintain minimum bank balances to cover essential payments
• Time expenses strategically: Avoid large purchases when cash flow is tight

Be proactive about payment issues

Communicate early when facing payment delays. Proactive communication can prevent credit score damage. For example, if the ATO intends to disclose a tax debt, they first issue a notice giving you 28 days to take action, demonstrating why early engagement is critical.

Steps for handling payment difficulties:

1. Contact suppliers immediately: Call before the due date, not after
2. Explain the situation: Be honest about your cash flow challenge
3. Provide a payment date: Give a specific timeframe for when you'll pay
4. Follow through: Pay exactly when promised to maintain trust

Build strong supplier relationships

Maintaining good relationships with your suppliers goes beyond just paying on time. Regular communication and transparency about your business situation help.

Treating suppliers as partners rather than just vendors can work in your favour. When suppliers trust you, they're more likely to work with you during tough times rather than immediately reporting late payments to credit agencies.

Keep your business finances on track

Your business credit score is a reflection of your financial habits. By paying bills on time, managing your cash flow, and maintaining good relationships with suppliers, you can build a score that supports your business goals. Staying on top of your finances not only improves your creditworthiness but also empowers you to make confident decisions for the future.

With clear, real-time insights into your financials, you can run your business with greater peace of mind. Try Xero for free to see how easy it can be.

FAQs on business credit scores

Here are answers to some of the most common questions about business credit scores.

How can I get my business credit score for free?

In Australia, you can request a free copy of your business credit report from the main credit reporting bodies, though frequency may be limited. Check the websites for Equifax, Experian, and Illion for their current policies on providing free reports to businesses.

What credit score do I need to get a business loan?

There's no single magic number, as each lender has its own criteria. However, a higher score generally increases your chances of approval and helps you secure more favourable interest rates. Lenders will also consider other factors like your business's revenue and time in operation.

How long does it take to build a business credit score?

Building a business credit score starts as soon as your business begins to have financial interactions that are reported to credit agencies, like opening a business bank account or getting a trade line with a supplier. It can take at least a few months to establish a solid history and see a score develop.

Can personal credit affect my business credit score?

For new businesses or sole traders, lenders may look at your personal credit score as an indicator of your financial reliability. However, for an established company, the two are generally separate. Your business credit score is built on the financial activities of the business itself.