30 November 2018

Understanding your credit score and why it’s beneficial to have a good one

Do you know your credit score, what it is used for, or even why it’s beneficial to have a good score? According to Experian*, 65% of Australians have never checked their credit score. Understanding how your credit score works and what can change it, may affect the decisions you make in running your day-to-day business.

What is a credit score?

Your credit score works the same way for your businesses as it does for you personally and is determined by summing up the information on your credit report at a particular point in time, into one number or ‘score’. A higher score means you have a good credit rating, with a lower score meaning you have a bad credit rating.

Your credit score is important as it represents to a lender your ability to meet your financial obligations. Whilst different lenders will consider different ranges of scores, it will have some influence in helping them decide whether to lend you money, and if so, how much they will lend you.

What information is used to determine credit scores?

Credit reporting bodies collect your financial and personal information and document it on your credit report. This information is then used to calculate your credit score. This includes information like the number of credit providers you have used (e.g. bank or utility companies), the amount of credit you have borrowed and how much is still available, the number of credit applications and inquiries you have made, the length of time you have used credit and your repayment history. Any unpaid or overdue loans and bills you have, or any debt agreements or personal insolvency agreements relating to bankruptcy you have, are also used to determine your credit score.

Your score can change regularly, as your financial circumstances change. Examples of what can drive the score to change include: applying for a new credit card, applying for a higher limit on a personal/business loan or paying one off, credit history being removed from your report (as information can stay for a set period of time) the bureau receiving new information e.g. any new credit applications, or if you’ve been late in making a payment.

Practical business impacts (late repayments, bills etc).

Making a late repayment or forgetting to pay a bill on time can negatively impact your credit score. Changing utility companies often and applying for multiple credit cards or loans can have a negative impact (so it’s important to do your research and only apply with the company you intend to go with, rather than testing the waters).

Tyro business loans are different

A Tyro loan is different to traditional bank loans which many customers are used to. Eligible customers are pre-approved and sent a loan offer within the Tyro Mobile App, which eliminates the need to apply for a loan and wait for a decision. We proactively assess your business performance so you don’t have to provide paperwork. Eligible merchants may be able to borrow up to $50K for their first loan and $120K for subsequent loans (subject to Tyro’s eligibility criteria). Repayments are automatically made daily from a percentage of your businesses daily EFTPOS takings (that you nominate), which means a slower day equals smaller repayments, supporting your cash flow (minimum repayments do apply). And to keep things simple, Tyro loans charge just one flat fee over the life of the loan, so borrowers know the total amount they are borrowing and paying back.
Loans with Tyro are so straightforward that once you accept the loan offer and provide a personal guarantee in the Tyro App, funding is available in minutes, so it’s great if you need quick, short term funding.

For more information about Tyro business loans, look for a loan offer in the Tyro App, or contact us on 1300 966 639.

If you’d like more information on your credit score or would like to obtain a credit report, you can contact one of the following credit bureaus:

Illion express