UK Company Credit Check

Businesses worldwide extend credit to their customers to keep the transaction flow going and build trust. However, dealing on credit can be risky without running a credit check on the company. As a lender, you need to know the track record of your receivables to know whether or not it is right to offer them credit.

Credit check a UK company:

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You can also obtain an international credit report on a company in any other country worldwide.

Most businesses rely on credit reports to avoid dealing with late payments and bad debt that can be time-consuming and resource-intensive. It allows them to pry into a business's credit history for a clearer image of what they are stepping into.

Whether you are a trader looking to offer credit to a business or a company applying for credit, it is vital to know the credit standing and how you can obtain a company credit check.


Run a business credit score
 

What Is a Credit Report?

A credit report is an aggregate history of your credit dealings. Similar to a personal credit check, a company credit check involves you or the lender checking your company's credit history to assess whether or not you will be able to repay the debt extended to you.

Along with basic information like the company's address, contact, branches, key personnel, etc., the information found in a business's credit check includes:

• Number of employees, sales records, subsidiaries
• Registration details
• Operational data
• Industry classification and data
• Public filings
• History of payments and collections
• Number of accounts with banks and detail

 

How Can a Credit Report Keep Me Safe?

When you are providing your services to another business on credit, checking the credit report of that business first can save you from potential trouble. If that business's ability to write off service credit on time is not adequate, it can affect your own company’s survival.

Credit reports are especially advisable with small business dealings. When a customer is delaying the payment or fails to settle the debt, it can affect your ability to make payments to your vendors. Therefore, the whole payment cycle can only keep running smoothly when your customer has the means to pay you on time. Many companies that don't run a credit check on their potential clients end up in a bad position.

Sometimes trading opportunities between smaller businesses may come about when a close friend or a business contact refers another business. You meet them in person, and they have the chance to show you their best side and don't provide you with any reason not to trust them. However, a credit check provides you with proof of whether or not their business meets the expectations you should expect based on what they may claim.
 

How to Run a Credit Check on Another Business

You can find dozens of agencies to access general business information, and some may also offer financial analysis with credit scores. However, for credit risk analysis First Report is one of the leading business credit report agencies in the UK, with the most up-to-date databases. Generally, the main agencies have varying calculation models, which can include different factors. After calculating, they rank a business's credit profile, typically from 1 to 100, though some use other scales. This is known as "credit scoring". The higher a business's score is, the better credit record it has.

You can run a company credit check by following these steps:
1. Ask the company you are looking to partner with for its precise legal name and, if the business is an incorporated company, it’s company identification number. In the UK this is the company registration number. Generally, asking for such sensitive information is not unexpected, and when you are looking to partner with a business, they should have no objection to agreeing to provide you with proof and all required documents.
2. When you have the business details, i.e., business name and address, you can obtain the credit report by calling or visiting the website of the credit report agencies.
3. You do not need permission to run a credit check on another business. However, you will be required to pay the agency to obtain the report. Different agencies have different costs [services and prices], but they are usually quite reasonable. Some agencies offer free credit scores, but the information is limited and may be insufficient if you're looking to make a business decision.
 

How Credit Agencies Gather Data

Credit agencies collect their data from various sources to analyse and report them in a sellable manner. They collect their data from the following sources:

Lenders Companies that extend trade credit to other businesses and businesses that lend to consumers may both engage in data sharing with credit reference agencies. When a lender extends credit to another entity or a consumer, the transaction and subsequent payment records may be reported to one or more agencies. Although some lenders might not take the trouble to report a credit payment, having a record is good if you're looking to build a credit history, for future credit, or as a consumer wanting to repair a damaged history of payment or previous unpaid debt.

Public Records Public records are accessible to everyone, so lenders can use this information to explore any data available in the public records. However, it is easier to get this data from credit reporting agencies that aggregate bulk data from many sources.

Miscellaneous Expenses Some other sources create varying factors to provide more analysis on your ability to pay off your loan. These can include utility bills, memberships, etc. While they do not add to your credit history, they allow the lender to judge your behaviour against your credit record.

Credit agencies that provide consumer data can also access information such as gender, income, and regular payments. However, not all data is always displayed in the credit report. Any information with a negative impact closed out for over six years is usually no longer shown.
 

Do Credit Agencies Make Lending Decisions Too?

While credit agencies are lawfully obliged to hold sensitive information about your company, they do not decide whether a lender or trading partner can provide credit to any business. Credit report agencies are independent organisations that only help a lender by providing accurate and factual data of their prospective partners.
 

Handling Negative Business Credit Reports

If a company's credit score is insufficient, you can choose to decline a credit extension. However, since the customer may not know that you ran a credit check on them, it is best to inform them in a polite way that you cannot extend them the credit due to economic restraints.

Furthermore, you could decide to offer them some favourable trading discount or alternative credit terms in order to keep the opportunity open for future business.

See more credit tips and information.