How to Check Your Business Credit Score

Find out how to check your business credit score in this guide by Compare Banks.

Updated: May 20, 2024
Matt Crabtree

Written By

Matt Crabtree

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In business, credibility is an intangible currency used to make deals, gain customers' trust, and get funding. The Business Credit Score (BCS) is the currency used by UK-based businesses.

Maintaining a high BCS could open up new opportunities, whether you use a conventional bank or a digital-only bank like Monzo

This is especially true for new businesses; the better their credit score, the sooner they can pay off their company debts and concentrate on expansion.

Why you should run company credit checks

Checking the credit history of each firm you do business with, or want to do business with in the future, is just as critical as keeping tabs on your own company's credit. All of your clients, customers, and vendors fall under this category.

But why exactly is it so crucial? How can you find out a company's financial details? When checking out a business, how exactly do you do that? We'll delve into these issues so that you may safeguard your company by making educated judgments.

Why should I check a company's credit?

Smart choices and a steady stream of income will determine the fate of your company. However, it's not only about how well you make decisions and how healthy your finances are. Every firm you do business with is critical to the continued existence and growth of your enterprise.

It's possible that you won't be able to fulfil orders if one of your suppliers goes bankrupt. If a customer doesn't pay their invoices, it might cause cash flow problems for your business. Furthermore, if a potential partner has a murky past or bad reputation, working with them might be devastating for your company.

Company credit checks allow you to do the following:

✅ 1. To begin with, safeguard your business's financial flow.

The danger of unpaid invoices and late payments may be reduced, unreliable or insolvent suppliers can be identified, bad debt can be avoided, and income can be maintained if you are familiar with the financial soundness and payment history of other firms. Having a steady stream of income depends on all of these things.

✅ 2. Be wary of companies that seem too good to be true.

Small and medium-sized enterprises (SMEs) are a prime target for fraud and scammers. Whether you want to know whether a firm is real or if it has a history of not paying its bills, you may run a credit check on it.

✅ 3. Third, keep your company's good name intact.

Who you do business with is only one of many contributing aspects to your reputation. The reputation and success of your business might be severely damaged if you're affiliated with the incorrect supplier, customer, or partner.

The same is true if the financial woes of a competing firm have an immediate and negative impact on your capacity to provide products or services or pay your own debts.

✅ 4. Boost decision-making quality 

You need accurate and impartial data about your business partners in order to make educated choices regarding the company's future. Is it possible for your suppliers to fulfil your requirements, or should you look elsewhere? When do you expect to be paid? Should you revise your terms of payment and billing or take other action instead?

✅ 5. Keep your advantage in the market

Keeping an eye on your rivals and strategic allies might help you better understand the state of the market. Staying ahead of the competition requires being able to identify areas of weakness, risks, trends, and growth prospects.

How to check your business credit score

Repairing your company's credit

Obtaining a business loan or establishing terms of payment with suppliers may be challenging and costly if a company has a poor credit score or none at all. 

If you're just getting started in the business world, a credit card might be a big benefit. Maintaining a positive payment history, establishing trade lines with reliable vendors, and dealing only with creditors who report to the major commercial credit agencies are all great ways to get your feet wet.

Keep a close eye on things

It is also important to keep an eye on major companies on a regular basis. When you initially start dealing with a new vendor or customer, they may pass a business credit check.

Once a year is the minimum frequency with which you should check their company credit score in order to keep tabs on their financial health and take any required preventive action.

Experian, Dun & Bradstreet, and Equifax are the three primary business credit agencies you may get information from to monitor the financial health of other firms and your score.

It's a good idea to check your company's credit score with numerous bureaus, since different lenders may use different bureaus.

1. Dun & Bradstreet — One of the best business credit reporting agencies

A Dun & Bradstreet credit score is not given out automatically to businesses. You'll need to get a DUNS number first; doing so is free but may take up to 30 days.

Once formed, Dun & Bradstreet provides a variety of ratings and predictions, including a Paydex score, delinquency score, and failure score, among others, about your company's financial health.

Dun & Bradstreet CreditSignal package, which includes alerts for changes to your Paydex score and business credit inquiries, is available at no cost to you and provides access to your Paydex rating as well as three additional ratings.

For a set price each month, premium subscribers may see more ratings and in-depth analysis in addition to more notifications and monitoring.

A higher credit rating will make it easier to apply for good credit cards, for instance. 

2. Experian — Popular way to check your business credit score quickly

Your company's credit score, financial stability risk assessment, payment patterns, and account histories can all be seen in Experian's CreditScore report.

The commercial payment history is the most important factor in the company credit score (1-100), which also takes into consideration the number of past-due accounts and the percentage of customers with payment periods longer than net 30 days. There is less of a chance that payments may be late if the score is greater.

Variables such as commercial collection accounts, credit utilisation, and company and industry risk variables are used to provide a score from 1 to 5 that “predicts the likelihood of payment default and/or bankruptcy within the next 12 months,” as stated on Experian's website. When the score is low, there is little danger of severe financial difficulties.

CreditScore reports may be purchased directly from Experian's website for £39.95 each, or you can pay £189 annually for access to your credit report as well as alerts, monitoring, and in-depth analysis by subscribing to Business Credit Advantage. There is no cost for a business credit report via Experian.

3. Equifax — Trusted business credit score checking for multiple scores

Equifax is one of the most reliable sources for checking company credit ratings. 

Credit risk, failure risk, and a payment index are just some of the ratings that may be found in an Equifax company credit report.

The probability of a company going bankrupt or being late on payments is reflected in a credit risk score between 101 and 992. The danger is reduced as the score rises. Delays in making payments have a negative impact on the Payment Index score (which ranges from 0-100).

In addition, the likelihood that a company will cease operations during the following year may be estimated using the failure risk score (ranging from 1,000 to 1,880). The likelihood of success decreases as the score decreases.

There are no fees associated with requesting a report for shareholders, however there are certain restrictions. To begin, personal credit reports are only accessible via loan and credit card applications for businesses. Second, you'll need to get in touch with an Equifax agent and provide them documentation of an application for commercial credit.

Tip: Do you want credit information on a different company? Equifax is the place to go if you need a credit report on a business partner, supplier, or competition. Equifax, unlike other commercial credit reporting agencies, does not provide prices on its website.

How to check your business credit score — Buying Guide

Solid financing and insurance premiums are only the beginning of what a high business credit score can achieve for your company; it may also pave the way for new business alliances and trade credit opportunities.

Business credit bureaus employ their own unique scoring systems, and unlike personal credit scores, it usually costs money to see your report. If you want investors, business partners, and lenders to take your firm seriously, you need to keep an eye on its public credit record and score.

Let's go further and find out what more you need to know about examining your company's credit rating. 

What is the purpose of a business credit score?

Similar to personal credit scores, corporate credit scores help determine loan eligibility, but they are calculated using a company's actual payment history. Lenders, landlords, and vendors all use them to infer a borrower's or tenant's creditworthiness and risk profile.

Experian, Dun & Bradstreet, and Equifax are just some of the specialised credit bureaus that commonly contribute to the calculation of a business's credit score. Information about the company's credit, payments, debt, and credit utilisation may be found in these reports.

A company credit score is determined by a secret formula used by credit reporting agencies. A few examples of these include the company's payment history, the sorts of credit accounts it has, and how long it's been in business.

Creditworthiness is measured on a scale from zero to one hundred or three hundred to eight hundred and fifty; a higher value implies stronger creditworthiness. Scores for businesses might vary because various credit bureaus employ different scoring methodologies and ranges.

Remember that your company's credit score may change over time. Paying payments on time, keeping your credit utilisation low, and keeping tabs on your credit report are all important ways to maintain your credit in good standing.

How is a business's credit rating affected?

The creditworthiness of a firm is shown by its credit score. The grade may be used as an indicator of a company's repayment habits and overall fiscal responsibility based on its track record.

Business credit ratings go from 0 to 100, as opposed to the 0-999 range used for personal credit scores. The higher the score, the more dependable and secure the company.

Factors that credit bureaus like Experian, Equifax, and Dun & Bradstreet use to provide a numerical value to an organisation's creditworthiness include:

✅ 1. How long you've been in operation

When comparing a new firm to an established one, the latter will have more payment and credit history information accessible. A credit score may now be determined with little effort. Also, older enterprises are statistically more safe since most businesses fail within the first three years.

✅ 2. Receipts and due dates

Timely payment of bills and invoices has a significant effect on credit ratings. A company's ability to repay debts on time reflects its credibility as a borrower and the soundness of its financial management.

✅ 3. How long you've had credit

Companies with a longer track record of credit and repayment history, such as those found at more established businesses, are better indicators of how effectively a company manages its finances.

✅ 4.  Percentage of available credit used

The ratio of a company's current credit use to its overall credit capacity is known as the credit utilisation ratio. A credit utilisation ratio below 30% is indicative of prudent financial management on the part of the organisation.

✅ 5. Type of Business the Company Is in

There are certain sectors that are riskier than others. That's why it's hard to anticipate the long-term viability of businesses operating in more precarious sectors.

What details might you expect to see in a report on a company's credit?

What data gets generated?

  • Overview of the company: Name, Trading Name, Registered Office, Incorporation Information, and Classification by Industry.
  • Information on the company's ownership structure: including its directors, stockholders, and “persons of significant control”.
  • Data pertaining to the company's finances: such as audited annual reports filed with Companies House, current and historical credit, trade credit, and payment records.
  • Past application volumes. 
  • Businesses with which you are affiliated.
  • Insolvency processes, lawsuits, liens, and other public filings against the corporation, including county court judgements (CCJs).
  • Suggested credit line for the company.

You might be asked to detail the nature of your business and its expected yearly income.

💡 To what end should you put this knowledge?

You can make more informed choices about who to do business with and how much credit to offer (if any) by consulting this data, which gives significant insight into how a firm runs and handles its finances.

Instead of making a choice based just on a credit score, it is crucial to consider all of the data shown in a credit report. Doing so can help you identify patterns and problems that might have an adverse effect on your own company.

A decline in profitability, whether slow or sudden, a high credit utilisation rate, frequent applications for financing, and a history of late payments or unpaid debts are all warning signs.

Related Guides:

FAQs

What is a good credit score for a business?

In what ways may a business's credit score be impacted?

Which company credit rating is required?

Is it possible to have a corporation credit score as opposed to a personal one?

How can I increase my credit score?

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