When running a business, understanding the financial health of companies you work with, whether they’re suppliers, customers, or potential partners, is essential. A company credit check is a key tool for mitigating risk and ensuring financial stability within your business operations. 

In this article, we’ll explore everything you need to know about performing credit checks, understanding the reports, and taking appropriate action based on the findings – as well as what it means when someone else checks your credit.

What is a company credit check?

A company credit check offers a detailed review of a business's financial health and creditworthiness based on their past financial behaviour. They’re used by lenders and potential investors to understand how a business conducts their affairs and how well they can handle their finances.

That’s because credit checks allow you to evaluate a company's ability to meet financial obligations, pay invoices on time, and remain solvent. These checks are conducted using reports from specialist credit agencies such as Experian, Creditsafe, and Dun & Bradstreet, which compile data from public records, payment histories, and financial filings​, including:

• Payment history (timeliness of payments, missed or late payments).
• Outstanding debts (total liabilities relative to assets or income).
• Financial performance (net worth, cash flow, profit margins).
• Company age (length of time in business).
• Legal records (County Court Judgments, bankruptcies, insolvencies).
• Credit utilisation (percentage of available credit in use).
• Public records (mortgages, charges, financial filings).
• Director and shareholder history (past business performance).
• Industry risks (sector-specific insolvency trends).
• Business size and demographics (number of employees, location).

Why are company credit checks important?

Credit checks bring together information that could be pertinent to business dealings, so you can make an informed decision about whether to work with that company. There are multiple ways they can come in handy, from protecting your business to securing better terms on a deal.

1. Risk mitigation: Conducting credit checks helps identify businesses with financial instability or potential insolvency risks. This allows you to avoid partnerships where cash flow issues from the other party could cause late payments, defaults, or supply chain disruptions​​.
2. Tailored credit terms: Understanding a company’s creditworthiness enables you to offer appropriate credit limits or payment terms, ensuring you maintain a balance between extending trust and protecting your business​.
3. Informed decision-making: When deciding whether to lend money, enter into long-term partnerships, or supply goods on credit, a credit check provides the context needed to make informed decisions​​.

What information does a company credit report provide?

A typical company credit report includes the following key components:

1. Credit score

The business credit score is a numerical rating that summarises a business’s creditworthiness. Scores are often based on historical financial performance, payment behaviour, and overall risk factors. A low score indicates higher risk, while a high score suggests financial stability​​. If you’re facing a credit check, it’s worth learning how to build business credit so you can make a good impression.

2. Credit limit

Credit limits reflect the maximum amount of credit that should be safely extended to the business. This figure is calculated based on the company’s financial position and historical payment patterns​​.

3. Payment history

Payment trends show whether the company pays its invoices on time or tends to delay payments. This section may also detail your average days beyond terms (DBT), highlighting how often payments are overdue​​.

4. Legal records

Information on legal actions, such as County Court Judgments (CCJs), bankruptcies, or insolvency filings, is included in most reports. These are significant red flags indicating financial trouble​​, and can mean an automatic no from many partners.

5. Financial statements

Credit reports often summarise financial data such as turnover, net worth, assets, liabilities, and profit margins. These figures provide deeper insights into a company’s financial health and growth trajectory​​.

6. Director and shareholder details

The report typically includes information about the company’s directors and major shareholders, including their history of managing other businesses. This helps identify whether those involved have a track record of financial stability​​.

7. Group structure

For larger corporations, reports outline group structures, including parent companies and subsidiaries, which can offer additional context about financial dependencies or support networks​​.

How to perform a company credit check

1. Select a credit check provider

Several credit agencies offer reliable and comprehensive business credit reports. Here are some of the leading providers:

• Experian: A market leader, with predictive scoring models and detailed reports​.
• Creditsafe: Offers free trials and international coverage, making it handy for small businesses​.
• Dun & Bradstreet: Offers a wide global database of business credit reports​​.

Depending on your requirements, choose a provider that aligns with your budget and desired level of detail, which will depend on the nature of the partnership.

2. Gather company details

To initiate a credit check, you'll need specific details about the business, such as:

• Registered company name
• Company number (from Companies House in the UK)
• Business address

These identifiers help locate the correct records, ensuring the data pertains to the right entity.

3. Analyse the report

Once you have access to the report, focus on key areas such as:

• Credit score and risk: Evaluate the company's risk profile.
• Payment history: Look for consistent late payments or missed deadlines.
• Financial stability: Review financial statements and balance sheets.
• Legal records: Check for CCJs, insolvencies, or disputes that may indicate trouble​​.

4. Monitor if necessary

Creditworthiness can change over time. Setting up monitoring alerts ensures you’re notified of any significant changes, such as a decrease in credit score or new legal filings​.

Red flags to watch for in a credit report

When reviewing a company’s credit report, keep an eye out for particular warning signs:

1. Frequent late payments: This may indicate cash flow problems.
2. High levels of debt: A business carrying excessive debt might struggle to meet its financial obligations to your company.
3. Unresolved legal issues: CCJs, insolvency filings, or Gazette notices suggest instability​​.
4. Declining financial metrics: Falling revenue or profits may indicate deteriorating financial health.

Free credit check options

While comprehensive credit reports often come at a cost, some providers offer free options:

• Creditsafe: Provides free company credit checks, including details like credit scores, financial summaries, and director information​.
• Experian: Offers pay-as-you-go credit checks, with some free trials available​.

These free services are ideal for small businesses looking for basic insights without committing to subscriptions.

Worried about getting a loan with a credit check?

The idea of applying for a loan can feel like an uphill struggle – especially if your credit score isn’t perfect. At iwoca, we understand that a traditional credit check doesn’t always tell the whole story. That’s why we’ve designed our Flexi-Loan to make borrowing simpler, faster, and more inclusive.

Instead of relying solely on a credit score, we take a more holistic view of your business’s performance.

• Real-time business data: We assess your business’s financial health using live metrics, such as revenue trends and cash flow. This means a poor credit score won’t automatically disqualify you if your business is thriving.
• Flexible borrowing: With the Flexi-Loan, you can borrow up to £1,000,000, with terms of up to 60 months. Repay early and you’ll only pay interest for the days you use the loan, giving you full control over your costs.
• Fast decisions: Our digital application process is quick and transparent, often delivering funding within hours.

Find out how much you could borrow with our business loan calculator.

Company credit check FAQs

1. What is the best company for credit checks?

Experian, Creditsafe, and Dun & Bradstreet are among the most trusted providers. Their extensive databases and detailed reports make them ideal for businesses of all sizes​​.

2. Can I check my own company’s credit score?

Yes. As a director, you can – and likely should – access your company’s credit report to proactively manage your financial health and address any inaccuracies​ before going for large contracts or applying for finance.

3. How often should I conduct credit checks?

Given that credit conditions can change relatively quickly, It’s advisable to perform credit checks annually for regular clients and more frequently for high-risk businesses or large transactions​.

4. Can I get a loan without a credit check?

The short answer is no – in the UK, it’s not possible to get a loan of any type without a credit check. All loans regulated by the Financial Conduct Authority (FCA) must include a credit assessment to protect both the borrower and the lender.

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