Company Credit Check

A company credit check is a multi-faceted tool supporting a host of applications. A company credit check was traditionally used for assessing the credit worthiness of businesses. It also helped in determining interest rates. Higher rates, for instance, were set for risky or overextended businesses. A company credit check while continuing to be a credit-decision support tool has begun to enable new applications such as customer acquisition and the prevention of company identity theft.

Uses of the Company Credit Check

Corporations worldwide have started using company credit checks to identify new customers. Over the years, the credit reference agencies have built a good database of credit information on businesses. This database of businesses though not as extensive as the one on individuals, is adequate. Anecdotal evidence suggests that the company credit check is on its way to becoming a customer acquisition tool in the business-to-business segment.

More importantly, businesses are using company credit checks to prevent company identity theft. The identity theft of individuals has already reached high levels in several developed countries. Now criminals are stealing the identity of corporations, which neglect to monitor their filings with company registration authorities on a regular basis. Criminals submit forged applications for changing the address and other key details of the company-and then use the stolen company identity for enriching themselves.

Now companies are protecting themselves by signing up for monitoring services of credit reference agencies and government organisations. These monitoring services either track inquiries or changes to company details. The monitoring services of credit reference agencies track inquiries. A high number of inquiries, for instance, indicate company identity theft. The email alert service of Companies House, by contrast, tracks changes to the company's details. Switching over to the electronic filing of returns and signing up for the Companies House Monitor, an email alert service, will help in preventing company identity theft.

A company credit check can also be used as a competitive tool. The credit report of a competitor will provide valuable financial and business insights. The section on payment history, for instance, will reveal the names of suppliers.

A company credit check can also highlight new business opportunities. The credit reports of businesses contain financial data, which can be mined to identify fast-growing businesses. Further analysis will either lead to fast-growing segments or companies which are growing fast through unique strategies. An analysis of credit reports will also help in identifying acquisition opportunities.

Company Credit Checks for Job Applicants

A company credit check also helps in preparing for a job interview. A credit report will provide a comprehensive understanding of a company. Job applicants could gather information from media reports and corporate web sites, but nothing comes close to a credit report in delivering a comprehensive understanding of a company. This understanding will help job applicants fare better in the interview. The cost of a credit report, however, may be too high for most job applicants.

Credit checks and reports are also making the supply chain cost-effective by identifying purchasing savings. Now most leading corporations use credit checks and reports for managing purchasing risk. Clearly, the applications of a company credit check are limited only by the imagination of the user.

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