How To Check a Business Credit Reference

Part of good business practice is checking the business credit reference of a company you plan to work with. You want to make sure that you are dealing with a business that is financially stable and not one on the verge of bankruptcy or with bad credit. If you need to check a business credit reference, here is what you can do.

  • Request the company to submit several credit references. The general standard is at least one financial lending institution (for example, a bank) reference and three business trade references (like suppliers of goods and services). Ask for the following information: bank or business reference name, contact person, address, phone number or fax number, and the company’s credit line amount with the lending institution or other business associates.
  • Get in touch with the business references the company provided. Speak to the contact person of each reference via phone, snail mail (or email if given). Tell him that you are planning to engage in a business relationship with the company and that you would like to inquire about the company’s credit standing. It is important to know from the reference how much their credit line is and if the company is able to meet credit payments on time.
  • Inquire if the company has a Dun & Bradstreet (D&B) Number. Some businesses register with D&B, a provider of “commercial information and insight on businesses.”  D&B provides credit reports and other pertinent information that can help you decide whether you should get into business with a certain company or not. Ask the company for their D&B number.
  • Register with D&B if you have not signed up yet. As a member of D&B you can gain access to credit reports and references of different companies who would like to do business with you. You can also check on the business references that the company submitted to you. D&B charges a fee for the services they offer.
  • Get credit reports from other sources. There are a number of credit rating agencies that can provide you the credit information you need. Equifax, Experian, and TransUnion are some examples of credit rating agencies. For a fee, these agencies can shed light on the past credit record of companies you are planning to deal with. You can get reports by mail, through fax or via email. The content of the report will depend on how much you want to know about the company’s credit history.

Note:  Do a background check of the business references themselves. This is to ensure that these references are legitimate companies. If the business reference has an office near your location, pay them a visit. It is better safe than sorry. There are many scam artists and unscrupulous individuals who would rather commit a crime than do honest work.

Before you extend credit to another company, you need to know whether this company has the ability to meet your payment terms and conditions. For this you have to ask for the company’s credit references. Business credit references are not difficult to check. You can get in touch with the references provided by the company you plan to do business with. Companies that perform credit ratings can also be a source of important credit information. Asking for a business credit reference should be a standard business activity performed by your company. This way, you can avoid the pitfalls of building a business relationship with a company who has bad credit.


Share this article!

Follow us!

Find more helpful articles: