Switchboard Finance Logo – Risk Grade Glossary

Risk Grade

A Risk Grade is an internal score lenders use to assess how risky a borrower is. It determines approval outcomes, interest rates, loan limits, and eligibility across Business Loans, Equipment Finance, Vehicle Loans, Working Capital Loans, and Low Doc Finance. Related terms: Risk Score, Borrowing Capacity, Credit Score. Relevant blogs: Business Cashflow System, Cashflow Mistakes SMEs Make, 7 Business Costs You Can Finance.

Why Risk Grade Matters

Risk Grade plays a major role in whether a loan is approved, how much is approved, and what the borrower pays. Businesses in the Tradie Hub, Truckie Hub, Café Hub, and Whitecoat Hub rely on strong risk grades to secure competitive funding.

What Risk Grade Shows

  • How likely a borrower is to miss repayments.
  • Whether the lender will offer premium, mid-tier, or higher-risk pricing.
  • Overall stability of the business or individual borrower.
  • Repayment behaviour shown in bank statements.
  • Strength of both personal and company credit files.

Official info: asic.gov.au

What affects a Risk Grade?
Credit history, bank statements, repayment behaviour, defaults, and trading stability all impact the grade.
Is Risk Grade the same as a credit score?
No — Risk Grade is an internal lender rating, while a credit score is provided by a credit bureau.
Can you improve your Risk Grade?
Yes — by maintaining clean bank statements, paying bills on time, and reducing overdue accounts.
Does Risk Grade impact approval chances?
Yes — strong grades increase approval likelihood and reduce interest rates.
Do lenders share Risk Grades?
No — Risk Grades are internal and not visible on your credit file.