Why a Company Credit Check is Invaluable to your Business

What is a company credit check?

A company credit check is a report on a given company’s credit worthiness. This is based on filed accounts, credit history and CCJs. This is similar then, in many ways to a personal credit report, such as the one which a bank will view when deciding whether or not to approve a mortgage. A company check can be a valuable tool for your business in many different situations. Below we explain how you might make use of a company check.

Get a report on your own company

This is a fantastic thing to be able to do because you end up with an unbiased, objective evaluation of your own company. You will see your company on a sheet of paper, similarly to how prospective lenders and investors will see it. This will allow you to improve any aspects of it which raise alarm bells, as well as to prepare answers and explanations to any concerns or issues raised by lenders and investors. That CCJ from 4 and a half years ago that you’ve completely forgotten about? If it’s on your credit report, expect to get questioned about it. Whether you’re seeking to increase your company’s line of credit, looking for investment or just want to see how your company looks from the outside, a company check is a cheap way to give you actionable data.

Protect yourself from fraud and unreliable contracts

It pays to check a company’s credit worthiness. Just as a credit card company will perform a check on you to see if you can be relied on to pay your bills on time; you should always be sure that you will be paid for any services which your company performs. If for instance, you are a building company with a contract offer from a gym and the gym’s credit report reveals a number of CCJs incurred for lack of payment, you may wish to reconsider accepting the contract. This scenario works both ways. If you own the gym and your credit check of the building company reveals CCJs for incompletion of work, you may wish to reconsider offering them a contract. Furthermore, if your search for a company delivers no results, then you know that the company is fraudulent as it has not been registered with Companies House and there exists a good chance that you will fall victim to fraud.

Be sure that the investment you are considering is worthwhile

We all know that in business it pays to show your best side, particularly to potential investors. If you are considering investing in a company, or even buying it outright, do the sensible thing and get a company credit check. That way you can be sure that you know everything there is to know about a company’s credit worthiness and history. If you make the mistake of buying a company with a low credit rating, you will find it difficult to muster enough of a cashflow to allow it to function. Check all companies before you commit to buying them, merging with them or investing and you won’t be in for any nasty surprises.

Benefits you can’t do without

Essentially, a company credit report gives you the benefit of seeing an objective summary of a company’s credit history and from this you get its credit score, which is used by all financial institutions in assessing credit worthiness. This can be used for your own company, or for one you are considering working closely with. Either way, a credit report gives you invaluable information which can really help you in formulating a strategy.

Antoni Swidlicki is a content creator at UK Credit Info<, which provides the cheapest credit reports for companies registered in the UK on the net. Image courtesy Consumerist Dot Com