How to Perform a Business Credit Score Check on a Customer

Ann Marie Smith

Jun 14, 2021

In most businesses, extending credit to customers is commonplace. Sending an invoice after purchase can help you build your customer base and bring in new business. Extending credit can also be risky without doing a business credit score check beforehand.

When you look at the pros and cons of extending credit, it becomes clear that a business credit check should be part of your standard operating procedure.

Business Reasons to Extend Credit

Some of the reasons business grant credit to customers include:

  • Makes it easier for customers to buy
  • Customers may buy more
  • Allows you to be competitive with other businesses
  • Builds goodwill and loyalty

By extending credit, you are sending a message that you believe in the quality of your products and services and expect customers to be satisfied.

Potential Drawbacks with Extending Credit

There are also potential drawbacks to extending credit to customers, including:

  • Cash flow depends on when customers pay
  • There is additional paperwork involved, such as invoices and statements
  • You may have to chase customers for payment
  • You may get paid late or, in some cases, never get paid

While you may need to grant credit to customers, you can improve the odds of getting paid on time by conducting a business credit check.

Business Credit Score Check

A business credit check is surprisingly easy to do. Unlike consumer credit reports, which require permission from the consumer, when you check business credit, you do not need permission. Anyone can pull a business credit report.

Three major business credit reporting agencies provide financial information about businesses.

  • Experian
  • Dun & Bradstreet (D&B)
  • Equifax

With each, you will get an overall business credit score and an assessment of a company’s financial health. The assessment will take into account a company’s prior credit history, whether they pay their bills on time, and whether there are any liens or judgments filed against them. This information will be used to predict business viability going forward.

Each business credit agency uses slightly different methods of arriving at the credit score and also provides different information within their reports. For example, D&B’s Paydex score indicates the risk of slow payments on invoices and evaluates the potential of companies going out of business. Experian and Equifax provide similar information but also give recommendations of credit limits.

Some business credit reports will provide tradeline information, so you can see how much credit they already have and how promptly they have paid their bills.

You will want to compare the different business credit reports to see which one works best for your business. Some companies find it valuable to pull more than one business credit report to compare the information.

After reviewing the options, if you are still not sure which business credit report is right for you, download our free report, How to Select the Right Business Credit Report. It details what information you get from each credit bureau and helps you determine the right report for your situation.

How to Check Business Credit

The easiest way to do a business credit score check is to go to href=”commandcredit.net/accredit.

You can see the different types of business credit reports from each of the credit reporting agencies, select the reports you want, and download them instantly. There is no waiting and no need to sign up for subscription services.

When you check business credit, you will be able to make better business decisions about both your customers and suppliers. You can enter into an agreement with customers and have more confidence that they will pay you. You can trust that suppliers will deliver.

If you find warning signs of potential credit issues, it is always better to know them upfront. This helps you determine the amount of credit you are willing to grant and under what terms. A business credit check can tell you whether someone has great credit or there is the risk of a deteriorating financial situation that could turn their problems into yours.

With accredit, there is a simple three-step process to order a business credit check:

  1. Search and select the business credit score check you need
  2. Enter the business name and information
  3. Pay online and download instantly

You should do a business credit score check on every prospective customer before granting credit.

Any time you let a customer buy on credit, you are taking a risk. For the small cost to check business credit, you can have peace of mind that you will get paid on time.

When you routinely perform a business credit score check on customers, you can confidently grow your company without putting it at risk. Search and select business credit reports from Dun & Bradstreet, Equifax, and Experian.