A greater push is needed to educate businesses about comprehensive credit reporting with only 7 per cent of these businesses having knowledge of their credit score.
Furthermore, while CCR includes small business owners as consumers, a notable exception to the proposed new legislation around CCR is the exclusion of the small business itself, according to OnDeck CEO Cameron Poolman.
According to a survey by OnDeck Australia, only half of the business owners who knew their credit score had checked it in the last 12 months.
While the Survey found 42 per cent of respondents knew the actual purpose of a credit score, around a quarter didn’t understand what a credit score was while around another quarter believed it was for purposes other than borrowing money such as business valuations or paying tax.
It was clear from the results that there was a lot of confusion around credit scores and their role in accessing funding, Poolman said.
He not only called for SMEs to be educated on their credit scores and the benefits from CCR, he added that the sector should also be included in such a framework.
“Nine in ten businesses in Australia are part of this sector but small business credit scoring is not captured under the new changes to credit reporting under CCR,” Poolman said.
“The increased competition potentially created by CCR would give all lenders in Australia a fair opportunity to show how they can support the small business sector of our economy,” he said.
“It creates choice and improved products and services through increased innovation; the end user, whether an individual or a small business, is the greatest beneficiary of such a system.”