Business Credit Checks Explained: What You Need to Know
What Is a Business Credit Check?
A business credit check (or company credit report) provides a financial profile of a company, including its creditworthiness, payment behaviour, and risk score. It helps you decide whether to extend credit, enter a contract, or trade with a business.
What Does a Credit Check Include?
A typical business credit report contains:
Company Overview
- Legal name, registration number, incorporation date
- Trading addresses, SIC codes, company type
- Current status and any events (CCJs, charges, winding-up petitions)
Credit Score and Rating
- A numerical score (e.g., 0-100) indicating creditworthiness
- A risk rating (low, medium, high)
- A recommended credit limit - the maximum amount you should extend
Financial Summary
- Key figures from the most recent accounts (turnover, profit, net assets)
- Trend analysis over 3-5 years
- Financial ratios (liquidity, gearing, etc.)
Payment Data
- Days Beyond Terms (DBT) - how late the company typically pays
- Payment trends - improving or worsening
- Industry benchmarks - how they compare to similar companies
Legal Events
- County Court Judgments (CCJs) - unpaid debts pursued through courts
- Charges - secured lending registered against the company
- Winding-up petitions - applications to close the company for unpaid debts
- Gazette notices - formal legal announcements
Directors and Ownership
- Current and former directors
- Persons with significant control
- Group structure and related companies
Free vs. Paid Credit Checks
| Feature | Free (Companies House) | Paid Credit Report |
|---|---|---|
| Company details | Yes | Yes |
| Accounts (raw) | Yes | Yes (analysed) |
| Credit score | No | Yes |
| Credit limit recommendation | No | Yes |
| CCJ data | No | Yes |
| Payment behaviour | No | Yes |
| Risk rating | No | Yes |
| Monitoring and alerts | No | Yes |
Free data from Companies House gives you the building blocks - you can review accounts, check directors, and look at filing history. But you'll need to interpret the data yourself.
Paid credit reports from providers like Creditsafe, Experian, or Dun & Bradstreet do the analysis for you, adding proprietary data sources like payment behaviour and legal events.
When Do You Need a Credit Check?
- Before extending credit - if a customer wants to pay on 30/60/90-day terms
- Supplier onboarding - checking a new supplier's financial stability
- Tender evaluation - assessing whether a bidder can deliver a contract
- Ongoing monitoring - keeping track of key customers' or suppliers' financial health
- Regulatory compliance - some regulated sectors require regular credit checks on counterparties
How to Interpret the Results
Credit score below 30 - High risk. Avoid extending credit without security. Check for CCJs, late filing, and negative net assets.
Credit score 30-60 - Medium risk. Proceed with caution. Consider shorter payment terms or smaller credit limits. Monitor regularly.
Credit score above 60 - Lower risk. Standard credit terms are likely appropriate, but continue to monitor for changes.
The NewcoHunter Approach
NewcoHunter doesn't provide credit data - we focus on discovering new companies at the point of registration. However, finding a company early through NewcoHunter and then running a credit check before engaging commercially is a solid workflow:
- Discover - find new companies via NewcoHunter alerts
- Research - review their Companies House profile
- Verify - run a credit check before extending credit
- Engage - reach out with confidence