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“A business credit score is a measurement (a value/number) that is used to determine whether a business is managing its finances well, and to ascertain if it is a good borrower or not. The score is the result of a mathematical algorithm based on data gathered about the business’ financial history. It includes information about the business’ regular payment behaviour and its repayment (or non-repayment) of debts.

“Not all credit bureaux in South Africa collect business credit data. The six primary credit bureaus were established as consumer credit bureaus, meaning they were set up to collect and share data on individuals, not businesses. As such, they have very little credit data on businesses. Where business credit data does exist, it is sparse, is costed at a premium, and pertains primarily to larger, more established businesses (i.e. with turnovers of more than R10 million per annum) who have previously secured credit, as opposed to micro and small businesses (i.e. businesses with a turnover of R0 to R10 million per annum). While the credit bureaus will provide a business credit report, the majority are thin files, meaning they do not contain sufficient information for a bank or lender to use in their credit scoring model.

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Article by FinFind

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