Most of us keep an eye on our personal credit file and credit score but how many business owners know what is on their company credit file and why should you check, and monitor, yours?  As with a personal credit file, a company credit file provides information about a company’s structure and financial history.

What’s Inside a Company Credit Report?

Of course, the credit report will show the credit score of your company but that’s not all.  The credit score isn’t the whole picture of a company.  There’s more information in a company credit report which can tell you a lot more about your company.  Credit reports also show:

  1. Business Information:
    • Directors details including name, contact address, date of birth and the date they were appointed as a director.
    • Names of the Shareholders
    • The group structure of the company, is it part of a larger organisation?
  2. Company’s Financial Information
  3. Adverse Information such as CCJs
  4. Filing History – has the company filed their accounts and completed their confirmation statements on time?
Why Should You Monitor Your Credit File?
  1. Financial Health Assessment
    By reviewing your credit file, and those of your customers, you can understand your financial health.  It provides insights into your company’s creditworthiness and highlights any financial issues that could impact your ability to secure favourable terms with suppliers, or lenders.
  1. Risk Management
    By monitoring your credit file, you are able to identify potential risks and stay informed of any negative information such as CCJs or late payments which may have been missed.  This means that you can take action before they escalate.  In the case of CCJs if you settle the account within 28 days of the order, the CCJ will be removed from your credit file.  However, if you settle after 28 days the CCJ will remain visible as either outstanding or settled for 6 years.
  1. Building Trust with Creditors and Partners
    A strong credit history demonstrates reliability and financial stability.  This enhances your company’s reputation and credibility for suppliers, creditors and potential lenders.
  1. Opportunities for Growth
    Access to credit is essential for business growth and expansion. By monitoring your company’s credit file, you can identify opportunities to improve its creditworthiness, such as paying bills on time, reducing outstanding debts, and managing finances more effectively. A positive credit history opens doors to better financing options and favorable terms, enabling your company to seize growth opportunities as they arise.
  1. Compliance and Legal Requirements
    Depending on your industry, there may be legal requirements or industry standards that mandate regular monitoring of your company’s credit file.  Staying compliant with these regulations helps to avoid potential fines, penalties, or legal issues that could arise from non-compliance.

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Related post: 5 Reasons Why You Should Monitor Your Customer’s Company Credit File