Benefits of obtaining Credit Reports and how to analyse Credit Reports

If you must decide whether to give credit to new customers, you should evaluate the reliability of potential suppliers, or you should analyze company's credit status, it is a good idea to request a credit report. The typical commercial credit report provides a snapshot of a company's credit history, which shows how you pay your bills and how you handle other financial obligations.

If you dont have the credit reports of the client companies, don't worry there are few companies who has the huge set of databases of the companies credit reports, you can get the required company credit reports by contacting them, ReportingAccounts.com is one of the best credit reports provider with free access to almost all companies and directors of the companies across United Kingdom

 

These reports can help you narrow down the risk by identifying warning signs related to the potential credit problems of customers. They also help you determine if your company is attractive to your suppliers from this point of view.

Your analysis of the credit report issued by the credit bureau should include a review of the following areas:

• Credit risk rating Many reports of this type include a rating system that measures the potential risk of delinquency. These ratings are generally based on the analysis of a variety of credit factors, such as performance in recent payments and legal actions initiated. They can help you make a decision about granting credit quickly. The “high risk” rating must be taken with great caution.
• Payment history Analyze the payments that the company has made in the past, to have indications on how it handles its obligations. Observe both timely payments and trends. Yes, for example, you notice that someone used to make minimum payments on their credit card and now pays the total balance every month, this may be a sign that the company has developed a stable income stream, and therefore Your credit risk has improved. It is also useful to observe the payment history of a company compared to others that operate in the same field of activity. This will tell you if your payment patterns agree with the normal practice in it. When studying your own report, notice what similar trends it reveals. These could be warned by their suppliers.
• Company information and background Credit reports include the name, address and telephone numbers of the company. They can also give information on the type of business or field of activity, on the number of employees, sales figures, the legal figure of the company and its key officials. Review this information and make sure it matches your company's own records. If not, you will need to contact the organization that issues the report to ask for explanations. Be alert to the existence of fictitious names used to try to hide the real owners of a company and that may be an indication that you are trying to hide information.
• Legal issues These reports contain information about bankruptcies, current lawsuits, foreclosures and lawsuits that can help you identify which new clients may represent a credit risk, or which suppliers may not be reliable. Keep in mind that there are many companies that at some time had to face a lawsuit or other legal actions. The presence of a pending case is not necessarily significant. On the other hand, companies that have suffered repossessions or that have failed must be carefully evaluated.
• Actions for collection Does the company have a history of omitting the payment of its accounts, or that collection actions are taken against it? Keep in mind that certain late payments may be due to disagreements about merchandise or other non-financial reasons.
• Age of the company Notice how long the company has worked. In general terms, companies that have several years of operation tend to handle their money better than newer companies. It is true that new companies may represent little credit risk, but in these cases it is necessary to further investigate their borrowing capacity. In the case of new businesses, observe the reports on the personal credits of those who run them. This will let you know how diligent they are in handling their accounts.