How to Run a Business Credit Check

Banks or other financial institutions are especially reluctant to offer lending to companies with sub-par credit scores. If funding is provided, it will require a higher rate of interest than the usual rate.

Fremont, CA: Extending credit to consumers and business partners can be a fantastic way to attract new companies and create trust, but it can also be extremely risky without conducting adequate business credit checks in advance. Given that coping with bad debt write-offs, late payments and invoice disputes are time-consuming and costly, most companies rely on credit profiles to provide the information they need to determine whether or not to extend credit.

Monitoring the credit activities of clients, partners and suppliers can also warn you to other possible risks that can affect your business. For instance, having an advanced awareness that a partner is in financial trouble or that a major supplier is about to go bankrupt helps you to seek solutions to protect yourself, such as involving other partners or seeking alternative suppliers.

Track Your Own Company Credit Profile

Monitoring your own company credit profile can be just as critical as monitoring that of your clients, associates and suppliers. Your company credit score will have an effect on the decisions of other businesses and organizations about their business relationship with your business.

• Banks or other financial institutions are especially reluctant to offer lending to companies with sub-par credit scores. If funding is provided, it will require a higher rate of interest than the usual rate. Similarly, prospective buyers are less likely to offer equity funding to companies in credit distress.

• Suppliers will review your credit score before extending your credit, and the amount of credit granted can decrease or decrease based on the results.

• Customers can use your credit rating as a barometer for the long-term health of your company, particularly if the products/services you provide require warranties and/or a high level of post-sale customer care.