business credit score

A business credit score is basically a measure of a company’s creditworthiness.

In simple terms, it’s a figure that indicates whether a company is a good business risk for financial institutions and other businesses.

Why is a good business credit score important?

A good business credit score helps your business establish and maintain relationships with lenders, suppliers and vendors.

It shows whether an organisation should lend your business money, give it credit or enter a business relationship.

A high score can translate into competitive interest rates, good trade credit and access to essential financial services.

When you most need financial support – during tough economic times – it can mean the difference between business survival and collapse.

How does the scoring work?

In South Africa, Experian, Compuscan, TransUnion and XDS compile commercial credit reports and generate business credit scores.

A bureau compiles a business credit report using data from lenders and financial organisations.

The report is based on a business’s payment history.

It indicates whether a business pays its debts on time and in full.

Any defaults or judgments against a business will be recorded in the report.

A business credit score is then generated.

Why a business must aim high

The higher the business credit score, the lower the risk to lenders and other businesses.

Scores range from 0 to 100 or, more commonly in South Africa, 300 to 850, depending on the bureau that generates the score.

A score less than 527 is considered very high risk; higher than 750 is considered the least risk.

The higher the score, the less risk a company faces either giving you credit or doing business with your company.

It indicates a relatively low chance of default.

So, you’re aiming for a business credit score as near to 100 or 850 as you can get.

If your business has a low credit score, you’ll struggle to get loans, credit and to build relationships with other businesses.

What if you’re a new business?

If you’re a new or startup business you may struggle to secure funding.

When a business hasn’t been in operation for long, it hasn’t had time to generate a business credit score.

Without a business credit score, traditional lenders are unlikely to lend you money or extend credit.

How to get a free credit score report

The National Credit Act states that every consumer and business is entitled to get a credit report free of charge, once a year, from each credit bureau.

Your business should take advantage of this and check in with each credit bureau.

Also, each South African credit bureau sells business information credit reports.

Go to these links to get your free annual credit score report directly from each bureau:

Six ways to improve your business credit score

Now that you know how your business credit score impacts your company’s chances of obtaining a loan at a desirable interest rate, you should strive to improve your score.

Before your business credit score can increase, you must demonstrate consistent improvements in your bad credit habits. Follow these steps.

  1. Monitor your credit reports regularly.
  2. Verify that the information is accurate and up-to-date.
  3. Always pay creditors on time.
  4. Pay off debt to reduce your debt balance.
  5. Rely less on revolving credit.
  6. Fix cash-flow issues.
  7. Avoid missed payments and any judgments.
  8. Establish business credit with companies that report trades (not all do).
  9. Communicate with suppliers.

How we offer loans at lamna

At Lamna, we offer fast, discreet loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork.

Because our loans are backed by collateral, your business credit score isn’t relevant and isn’t affected.

For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.

Complete our Online Application Form

Illustrative example

Client borrows R10,000 for 90 days.

Loan Amount Repay Terms Monthly Repayment Total Repayment Initiation Fee Monthly Fee
(Interest + Service charge)
APR
R10 000 3 months R568.40 R12 902.20 R1 197 R560 60%

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APR & Loan repayment period

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

Renewals

All accounts may be renewed if they are up to date.

Collection

All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.

Non-payment

Non-payments may result in the matters being escalated.

Illustrative example

Client borrows R10,000 for 90 days.

Loan Amount Repayment Period Monthly Repayment Total Cost of Loan Initiation Fee Monthly Fee
(Interest + Service charge)
APR
R10 000 3 months R568.40 R12 902.20 R1 197 R560 60%