Company credit checking explained
What is a company credit check?
A company credit check is an assessment of the financial position and credit risk associated with a business. It brings together financial, legal and corporate information so that you can make a more informed decision about whether to trade with that company and, where appropriate, how much credit to provide.
Credit checking is commonly used before offering payment terms to a new customer, increasing an existing customer's credit facility, entering into a supplier agreement or reviewing the financial position of an existing business relationship.
Rather than relying on one piece of information, a company credit report considers a range of indicators. These can include the company's financial performance, filing history, age, size, industry, directors, County Court Judgments, mortgages and charges and other factors associated with insolvency risk.
- Company credit risk scored out of 100
- Forward-looking assessment of insolvency risk over 12 months
- Recommended company credit limit
- Companies House and financial information
- CCJs, mortgages, charges and company history
Accessing a report
How to access a company credit check report
Start by using the company search to locate the business you want to check. Selecting the correct company will take you to its company information page, where the available credit information can be accessed.
- Search for the company Enter its registered company name or company number to identify the correct business.
- Open the online company report Review the basic company information to make sure you have selected the correct legal entity.
- Choose how to access the report Unlock individual company information for £20+VAT or unlock unlimited reports by selecting one of our subscription plans.
- Review the credit information Consider the risk score, credit limit and underlying financial and corporate information together.
Understanding the report
What's included in a company credit check?
In addition to public company information supplied through Companies House, our company credit reports bring together a range of financial and risk indicators designed to give you a broader view of a company's credit position.
Company Credit Risk Score
Credit risk is a measure of how likely a business is to become insolvent within the following 12 months. The company is scored out of 100, providing a straightforward indicator of the level of credit risk associated with the business.
The score should be considered alongside the information supporting it. A single numerical score is useful for comparison, but the underlying financial and company information helps explain why a business has received its current rating.
Recommended Credit Limit
The recommended credit limit provides a guideline for the amount of credit that might reasonably be extended to a business at any one time.
This can help businesses establish more consistent payment terms and avoid exposing themselves unnecessarily to a customer whose financial position may not support the proposed level of credit.
County Court Judgments
A County Court Judgment can indicate that a creditor has previously needed to use court proceedings to recover a debt.
Company credit reports can show County Court Judgments (CCJs) registered against a company during the previous six years, including the judgment date, court, amount, case number, date paid and current status.
Company Financials
Financial information filed at Companies House is converted into a format that makes it easier to review company performance over time.
Depending on the accounts filed by the company, this can include figures such as cash at bank, net worth, assets, liabilities, working capital, turnover and other financial measures.
Looking at several years of financial information can provide considerably more context than viewing the latest accounting period in isolation.
Key Risk Factors
The report identifies factors contributing to the company's current credit position. These can be positive, neutral or negative and help explain the reasoning behind the headline risk score.
Director and Secretary History
Current and historic company appointments can provide useful context about the people responsible for running a business.
The information can include an individual's role, how long they have been associated with the business and appointments held at other companies.
Company and Group Structure
Information extracted from company filings can help identify where a business sits within a wider corporate group.
This may include the ultimate holding company and subsidiaries where those relationships are disclosed in the available company records.
Mortgages and Charges
Charges registered at Companies House can provide information about borrowing secured against the company or its assets.
Reports can help you review satisfied and outstanding charges by type, date, status and the organisation to which the debt is owed.
Company Event History
A chronological company history makes it easier to review important changes since incorporation, including company name changes, director appointments and Companies House filings.
Risk methodology
How is a company credit score calculated?
Company credit scores are calculated using an algorithm that considers historical insolvency data and a range of characteristics associated with the company being assessed.
The variables used in the assessment are adjusted according to factors such as company size and industry. The scoring model is reassessed periodically so that the relationship between the available company data and insolvency risk remains relevant.
Factors that can influence a company credit score
- Age of the company
- Company size
- Financial performance
- Age of the latest financial statements
- Comments from independent auditors
- Directors' history and performance
- Group influence
- Company demographics
- Mortgage and charge information
- Industry insolvency trends
- Number of County Court Judgments
- Value and frequency of CCJs
- Time-sensitive company filings
Understanding credit limits
How is a company credit limit calculated?
A recommended credit limit is calculated by considering the company's financial position together with its credit risk rating.
Where a company has a positive credit rating and stronger financial indicators, such as net worth, working capital, operating cash flow, debtors, cash and turnover, this may support a higher recommended credit limit.
Where these measures are weaker or negative, the recommended exposure may be reduced accordingly.
Your own commercial circumstances, payment terms, risk appetite and existing exposure to the customer should also form part of any credit decision.
Practical use
How to use a company credit report
A company credit report is most useful when the different parts of the report are considered together rather than treating any one indicator as the answer to whether a company should receive credit.
| Information | What it can tell you |
|---|---|
| Credit Risk Score | Provides a quick indication of the company's relative insolvency risk. |
| Credit Limit | Provides a guideline for the level of commercial credit exposure. |
| Financial History | Shows whether financial strength appears to be improving, stable or declining. |
| CCJs | Can highlight previous difficulties in paying creditors. |
| Charges | Provides information about certain forms of secured company borrowing. |
| Directors | Provides background on the people responsible for managing the company. |
| Ownership | Helps explain who controls or has invested in the business. |
Checking a new customer
Before agreeing credit terms with a new customer, review both the recommended credit limit and the information supporting the company's risk score. This can help identify circumstances where shorter payment terms, a lower credit facility or payment in advance may warrant consideration.
Reviewing existing customers
Credit checking is also useful for existing customers. A customer's financial position can change over time, particularly where your exposure to that customer has increased or their payment behaviour has changed.
Comparing potential suppliers
Financial stability can also be relevant when selecting important suppliers. A financially distressed supplier may create operational risk even where your business is not extending credit to them.
Keeping information current
How often is company credit information updated?
Company information is updated using daily feeds from official data sources. When new information becomes available, this can feed through into the company report and the information used to assess its credit position.
Because company circumstances can change, it is useful to review important customers periodically rather than relying indefinitely on a credit check completed when the commercial relationship first began.
Report access
Single company checks and subscription access
If you only need to investigate a single business, individual company credit reports are available for £20+VAT per report. Simply search for the company you want to check and purchase the report when you need it.
For businesses carrying out company credit checks regularly, our unlimited plans start from £35+VAT per month, or £350+VAT when paid annually. These plans are designed for businesses that frequently assess new customers, review existing relationships, monitor credit risk or research other companies.
The appropriate option will depend on how frequently your business needs to check new customers, monitor existing relationships or research other companies.
Business Monthly
Flexible access with no long-term commitment.
Billed monthly. Cancel anytime.
- ✓ Unlimited credit reports
- ✓ Instant online access
- ✓ No long-term commitment
Business Annual
Get the same unlimited access for less.
- ✓ Unlimited credit reports
- ✓ Instant online access
- ✓ Pay annually and save
Frequently asked questions
Company credit check FAQs
What is a company credit check?
A company credit check reviews financial, corporate and risk information associated with a business to help assess its creditworthiness and the risk involved in extending commercial credit.
What does a company credit score mean?
The score provides an indication of the company's credit risk. Company Check scores businesses out of 100 and uses the available company, financial and insolvency information to assess the likelihood of insolvency during the following 12 months.
What is a company credit limit?
A company credit limit is a recommended guideline for the amount of commercial credit that might be extended to a business at any one time. It should be considered alongside your own risk policies and commercial circumstances.
Does a credit check include Companies House information?
Yes. Company credit reports include public company information sourced from Companies House alongside additional credit risk, financial and analytical information.
Can a company credit score change?
Yes. A company's score can change when its underlying financial, corporate or risk information changes. New accounts, filings, CCJs and other company events may affect the assessment.
How often should I credit check a customer?
There is no single review frequency suitable for every business. Higher-value relationships, customers receiving substantial credit and businesses showing signs of financial difficulty may justify more frequent review.
Can a credit report guarantee that a company will pay?
No. A credit report provides information that can support a commercial decision, but it cannot guarantee future payment or predict every change in a company's circumstances.
Check a company
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