Running a small business requires keeping a close eye on your own financial health. But there’s another side to looking after your business that’s just as important – understanding the financial health of the companies you work with.
Every day, 38 businesses in the UK close their doors because of late payments, which is just one of many risks that can disrupt your cash flow and strain your relationships. And it’s why running a credit check on a company to discover the credit rating of your customers, suppliers, and partners is a vital part of running a healthy business.
In this article, we’ll walk you through how to check a company’s credit score, what the reasons are for doing so, and what to do if you spot red flags. We’ll also cover what steps you can take when a formal credit check isn’t possible, and help you build stronger, more reliable partnerships.
In a nutshell: Running a credit check on another business can help you uncover issues that could put your cash flow or reputation at risk. Credit reference agencies like Experian, Equifax, and Dun & Bradstreet can provide detailed reports on a company’s credit history, payment behaviour, and financial stability. You can use these insights to avoid risky partnerships, secure better deals, and protect your business against late or missed payments.
What is a company credit check?
A company credit check is a way to assess another business’s financial health. Just like you’d check a used car’s service history before buying it, checking up on the credit scores of your suppliers, partners, and customers helps you see whether they’re likely to pay on time, manage their debts, or even stay afloat.
Company credit checks can be attained from credit reference agencies which pull together publicly available data – such as Companies House filings, court records, and payment behaviour – to give you a clear picture of a company’s financial stability and risk level.
Running a credit check on another business is standard practice for larger companies, and is often done by start ups too. So whether you’re a sole trader worried about cash flow or an established business scaling up, a credit check can give you the insight you need to make smarter decisions.
What determines a company credit score?
When you check another business’s credit score, you’re looking at a snapshot of their financial health. And while each credit reference agency (CRA) has its own way of calculating scores, they all rely on a core set of factors – most of which you’ll find detailed in company credit reports.
Company age and size: Older, larger businesses usually have more financial history, which makes their scores more predictable.
Industry risks: Some sectors face more volatility (eg media or oil) where market changes or regulations can quickly impact financial health.
Credit history and payment behaviour: On-time payments can boost a score, while late payments or CCJs can bring it down. A single missed payment can leave a mark, so this section is always worth a close look.
Credit utilisation: Businesses using most of their available credit can struggle with cash flow. Lower utilisation suggests better financial management and a healthier score.
Public records and legal filings: Insolvencies, bankruptcies, and director disqualifications are major warning signs. CRAs flag these in reports, as they can signal serious financial challenges.
Trade references and supplier relationships: If suppliers report late payments, it’ll show here. Consistent delays can lower a score and raise concerns about reliability.
Top tip: As well as showing a score, a credit report explains the financial habits behind it. You can use that insight to make informed decisions – whether that’s adjusting payment terms, negotiating contracts, or choosing to walk away from risky partnerships.
Why run credit checks on companies in the UK?
When you work with another business, their financial health directly impacts yours. That’s why checking a business credit report is so important. It’s a smart way to protect your cash flow, minimise risk, and make better decisions for your business’s future.
Running credit checks on companies can help:
Protect your cash flow: Late or unpaid invoices can disrupt your ability to pay your own bills. With over one in 10 SMEs forced to write off between £1,001 and £5,000 from unpaid invoices, the risk is very real. Running a credit check on a business can reveal if a customer or partner has a history of late payments, so you’re not left out of pocket.
Avoid fraud and hidden risks: A credit report for companies uncovers red flags like County Court Judgments (CCJs), insolvency proceedings, or a pattern of unpaid debts. With 587,000 CCJs on the UK register (roughly one in ten businesses), these warnings aren’t rare. Spotting them early could help you avoid companies that could drag you into financial trouble.
Make smarter business decisions: If a company’s credit report reveals early warning signs (eg late payments, rising debts, or a declining credit score) you don’t necessarily need to walk away. Instead, you could adapt your approach to mitigate the risk.
Ultimately, running a credit check on another company is about due diligence. You’ll get information you need to protect your business.
Top tip: If you’re dealing with late payers, read our guide on chasing overdue invoices to help you understand how to recover what you’re owed without damaging relationships.
What’s inside a business credit report?
A business credit report gives you a full picture of a company’s financial health – not just its credit score. So when you run a UK company credit check, you’ll see a range of details that can help you decide whether to work with a business, extend credit, or adjust your terms.
Here’s what you’ll typically find in a business credit report:
The company’s registered details: This includes its name, address, and business structure (eg limited company or sole trader). You can use this information to confirm you’re checking the right business and spot any discrepancies, like trading under a different name.
Background information: This includes how long the company’s been trading, its industry, and key people like directors or owners. A long trading history can suggest the business is stable, while frequent changes in leadership might raise questions.
Financial information: This can include turnover, profit margins, and debt levels. You can use this information to determine whether the business is growing, struggling, or just treading water.
A summary of payment history: This can include how promptly they pay suppliers, banks, and other creditors. Look out for late payments or defaults. If a company consistently pays invoices late, there’s a good chance they’ll do the same to you.
Public records: This can include County Court Judgments (CCJs), legal claims against the company, or bankruptcies. These are serious warning signs. For example, a CCJ means the company has failed to pay a debt and been taken to court.
What red flags should I look for when running a credit check on a company?
Some issues in a credit report are obvious, like a string of unpaid debts or insolvency proceedings. But others need closer attention:
Falling profitability: If a company’s profits are shrinking, it could struggle to pay its bills – or yours. If they’re a supplier, this might mean delays or even supply chain disruptions. If they’re a client, it could increase the risk of late or missed payments.
Poor short-term debt management: If a business regularly misses payments on short-term loans or credit, it suggests cash flow problems. That’s a direct risk to you if they can’t pay on time.
High debt-to-income ratio: If a company owes a lot more than it earns, it might be overstretched. What counts as ‘high’ varies by industry, so compare their ratio to similar businesses. If it appears on the high side, proceed carefully.
Multiple credit applications in a short time: This can suggest a major need for funding, which might mean they’re in trouble or planning to take on more than they can handle.
Top tip: While it’s important to run a credit check on another business to identify potential issues, it’s also worth checking your own business credit score to improve your own standing with partners. A low score could limit your access to better payment terms, loans, or even put off potential clients and suppliers. You can use Tide’s Credit Score Insights to access your business credit score.
How can I get a credit check on a company?
Uncovering the financial health of another business is straightforward once you know how to do a credit check properly. You don’t need to be a financial expert – you just need a few details about the company and access to the right tools.
The simplest way to check a business credit score or review its full credit history is to request a formal business credit report from a UK credit reference agency (CRA) such as Experian or Dun & Bradstreet. These agencies collect and analyse financial data to create a credit profile for every registered business. And while each CRA uses its own scoring system, they all focus on key factors like payment history, public records, and financial stability. We’ll provide more information on your options, below.
What information is needed for a credit check?
To get started, you’ll typically need:
The company’s full legal name
Its registered address
The company registration number (if it’s a limited company)
Most CRAs let you search using just the company name, but having the registration number can speed up the process and ensure accuracy.
How often is a company credit report updated?
Credit reports are updated regularly, usually every month or quarter, as new financial data becomes available. This means the report you access today could change in a few weeks if the business takes on new debt, misses payments, or faces legal action. For big decisions, it’s worth checking the report again before signing on the dotted line.
Top business credit check report agencies in the UK
There are three main credit checking companies in the UK providing business credit reports. Each offers slightly different insights, so the best one for you depends on what you need to know.
Dun & Bradstreet PAYDEX
Dun & Bradstreet’s PAYDEX score ranges from 1 to 100, with 80 or above considered low risk. Their reports focus heavily on payment history, using data from suppliers and vendors to assess how reliably a company pays its bills. Many lenders and suppliers use this score to set credit terms, so it’s a good starting point if you’re assessing a potential partner or customer.
Experian
Experian’s business credit search also scores businesses from 0 to 100, with scores above 80 indicating strong creditworthiness. Their reports include payment history, public records (like CCJs), and financial accounts. Banks and lenders often rely on Experian’s data when deciding whether to approve loans or extend credit, which makes it a useful tool for assessing financial stability.
Equifax
Equifax is another agency that uses a 0 to 100 scale for its standard business credit score. But they go further with additional reports, like the Business Failure Score, which predicts the likelihood of a company closing within the next 12 months, and the Business Credit Risk Score, which flags potential payment delays. If you’re looking for deeper insights for higher-risk decisions, Equifax’s extra reports could be particularly valuable.
What to do when a company has a bad credit report
If a business credit check brings up some red flags, that doesn’t always mean you should walk away from a company. But it does mean you need to act carefully. You’ve got two main options: decline the relationship or move forward with extra safeguards.
Option 1: Declining a customer
If the risks outweigh the rewards, it’s okay to say no. The key is to do it clearly and kindly – you don’t want to burn bridges or damage your reputation.
You might want to start by thanking them for their interest. Then explain your decision in neutral terms, without going into detail about their credit history. For example:
“Thank you for your inquiry. After reviewing your request, we’re unable to offer credit terms at this time. We’d still like to work with you, though. We can process your order on a cash basis, or we’re happy to discuss a deposit arrangement to get started. Let us know what works for you. We value your business and hope to find a way forward.”
This approach keeps the door open for future opportunities while setting clear boundaries. If they’re a supplier or partner, you might add:
“We’re focusing on managing our cash flow carefully right now, so we’re only working with partners on a pre-payment basis. We appreciate your understanding and would be happy to revisit this in the future.”
Offering an alternative, like cash payments, smaller orders, or a deposit, can show you’re still open to doing business – just on terms that work for you.
Option 2: Choosing to take the risk
Sometimes, the potential upside can make it worth proceeding – even with a risky credit report. Maybe the business is in a growing industry, or their recent struggles were due to a one-off issue like an expansion or temporary cash flow dip. If you decide to move forward, you could put protections in place to limit your exposure.
One of the simplest ways to do this is with proforma invoicing. This is where you issue an invoice upfront, asking for payment before you deliver the goods or services. It’s a low-risk way to test the relationship and make sure you’re not left out of pocket.
For example, you could:
Ask for full payment upfront for the first few orders
Request a 50% deposit before you start work, with the balance due on delivery
Set a lower credit limit initially, then review it after a few successful transactions
Proforma invoicing can be a good way of protecting yourself, but it also helps build trust. It shows the other business that you’re serious about working together, but need reassurance. And if they pay on time, it’s a sign they’re becoming more reliable. Over time, you can gradually relax the terms as they prove their creditworthiness.
Top tip: If you’re working with a supplier, consider shorter payment terms (eg seven days instead of 30) or partial payments linked to project milestones. This will help spread the risk.
What if I can’t get a credit check on a company?
Not everyone you work with will have a formal credit report for their business available. Newer companies, sole traders, or those based internationally might not appear in the usual databases. And sometimes, you just need to move fast. Fortunately, there are other ways to assess risk and make an informed decision when you can’t credit check a company in the UK through the standard channels.
Ask for a bank reference: Banks often provide references for their business customers, confirming how long they’ve held an account and whether it’s been conducted satisfactorily. They won’t share detailed financials, but a positive reference can give you confidence that the business is legitimate and manages its finances responsibly.
Ask for supplier or trade references: Speaking directly to a company’s suppliers can reveal a lot about their reliability. You could ask for two or three references from businesses they’ve worked with recently. This can reveal if and how quickly they were paid, if communication was good, and whether there have ever been disputes.
Check published accounts: If the company’s registered in the UK, you can access their filed accounts for free on Companies House. Look for signs of financial health: Are revenues growing? Are profits consistent? Are there any outstanding loans or legal notices? If you’re unsure, your accountant can help you review the numbers.
Do a director check: If the company is a limited business, you can look up its directors on Companies House. Have they been involved in failed businesses before? Are they directors of multiple companies? A quick search can uncover patterns, like repeated insolvencies, that might make you think twice.
Trust your instincts: If something feels off – whether it’s vague answers, missing paperwork, or pressure to skip checks – don’t ignore it. No deal is worth risking your business over. If you do decide to proceed, consider keeping any credit limits low until you’ve built trust over time.
These steps may not give you the full picture a credit report would, but they’ll help you make a smarter decision. And if the risks still feel too high, it’s okay to walk away. There are always other opportunities.
Wrapping up
Running a credit check on another business helps you avoid late payments, bad debts, and risky partnerships. And you’ll put yourself in a stronger position to negotiate and work with the right people.
Here’s a reminder of the key points:
Credit checking a business is quick, easy, and won’t affect your own score
Credit reports help you spot red flags, like late payments or CCJs, before they become your problem
Regular checks build better relationships and protect your cash flow as you grow
Once you’ve done your due diligence on your partners, make sure your own business is just as resilient:
FAQs
Does a company’s credit history affect their credit score?
Yes, a company’s credit history, including late payments, CCJs, or high debt levels, directly impacts its credit score. Lenders and suppliers use this score to judge how reliable the business is before offering finance or terms.
Is a company credit file the same as a credit check?
No, a credit file is the full record of a company’s financial history, while a company credit checker provides a snapshot of that file at a single point in time. If you want to check company credit, you’ll typically access a summary rather than the complete file.
Are corporate credit reports accurate?
Credit reports are usually accurate, but mistakes can happen if any information is outdated or misreported. It’s always worth double-checking details, especially if something seems off.
Can you get a free company credit check online in the UK?
Yes, you can get a free company credit check but it will contain only basic information. Detailed reports from agencies like Experian or Dun & Bradstreet are usually charged.
Will checking another business’s credit affect my own credit score or reputation?
No, when you credit check a business, it won’t impact your own score or reputation. These checks are invisible to other companies and don’t show up on your report.
Do I need permission to check a business’s credit score?
You don’t need permission to check a business’s credit score, since the information is publicly available. But you should only use it for legitimate purposes like assessing suppliers or partners.
Are there credit check services that integrate with my existing financial tools?
Yes, some credit check services, like Experian, integrate with accounting software or platforms like Tide. This makes it easier to run checks without switching between tools.
