If you own a business, it is crucial to have good credit. You need good credit to take out loans and work with other businesses. Additionally, you should try to only work with companies and vendors with good credit. As a result, you must know how to run a business credit check.

Before you start working with a new company, you should perform a business credit check on them. Additionally, it is important to periodically perform business credit checks on your business. By doing so, you can address or dispute sections of your business’s credit profile.

Why Monitoring Your Own Business Credit Profile Is Important

Knowing how to run a business credit check on your company is more important than performing them on other businesses. If you find that a company you considered working with has bad credit, you can drop them and work with someone else. However, if the credit check on your business is poor, you will lose business with most other companies.

The most significant reason to learn how to run a business credit check on your company is so that you can get financing from banks. Banks are unlikely to extend lines of credit to businesses or people with bad credit. If they do, they will demand a higher interest rate. Suppliers will run the same checks before extending lines of credit to your company.

Another thing to consider is that customers often check credit ratings to assess the long-term health of your company. Not only will this affect the number of sales you get, but it will affect the price of your stocks in the market.

What Score Do You Need for Business Credit?

To answer this question, we must first address the scale on which business credit scores are assessed. Business credit scores range from 0 to 100. Small and large companies use the same scale.

Most small business lending companies require a minimum credit score of 75. However, 75 is just the cutoff, and many companies prefer higher scores. So, the better your business credit score, the better interest rates you will get on your lines of credit.

When Should Your Business Perform a Credit Check?

You should always run a credit check on a company before you enter business with them. By checking their credit, you can see if any red flags pop up that will cause you to question the partnership. Additionally, it will let you assess risk, determine payment patterns, and identify potential conflicts of interest. You should avoid working with businesses with bad credit because they can bring your company down with them.

As for performing credit checks on your business, there is no set rule for how often you should do them. Performing them at the end of each quarter is smart because you can see if anything changed. You can then reassess and make adjustments so that your business is more successful in the next part of the year.

Additionally, you should perform a credit check on your business before and after you make any significant change to your business. For example, opening up a new location or branch could have a significant effect on your business’s credit profile. You need to know if the changes were good or bad.

What Information Will You Need to Check Your Score?

To learn how to run a business credit check, you need access to all your company’s financial reports. Your best option is to pay for a business credit report online. Several providers let you see your company’s credit score.

Additionally, when you subscribe to one of these packages, they will provide advice on how to improve your company’s credit score. 

Unfortunately, most packages require that you pay a fee, but are there any free options for checking a business credit score? Yes, there are a few free options, but they usually provide less information to users.

How to Run Your Business Credit Check

The first step is to register your business with a business credit reporting bureau. You must select a membership level. The higher the level, the more thorough the report you will get. Once you register online, confirm your account, and pay the fee, you can immediately request a credit check for your business.

After requesting a credit check, you must input various financial and business information. Depending on how thorough a report you requested, it may take a long time to enter all of this information. As a result, it is smart to get your financial reports in order before requesting a credit check.

Depending on the company, it may take varying amounts of time to perform the check. You will receive an email alert when the report is ready to view. You will receive a score ranging from 1 to 100.

A score above 75 means the company pays all bills on time. Conversely, a score below 30 indicates your company is likely to file for bankruptcy. 

What Factors Affect a Business Credit Check?

Several factors affect business credit scores. The most important is the financial reliability of your company. If your company consistently pays its bills, it will likely receive a high credit score.

Red Flag Alert’s Business Credit Reporting 

Red Flag Alert is a company that has worked for 15 years to provide extensive business credit checks with solutions for bad credit scores. They use a credit checking system that makes it easy for you to see how much trouble your business is in.

Any company with a red flag has a chance of falling into insolvency. Sixty percent of companies with three red flags will fall into insolvency within seven days.

Red Flag Alert is a popular option because it provides specific company credit check scores, solutions, and the best course of action for your company.

Final Thoughts

If you own a business, you should learn how to run a business credit check. You should be able to perform checks on your business and all companies you plan to work with. Doing so will help you in the short and long term.

About the Author, Madison Taylor

Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates! Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.