How to Check a Company's Credit Rating

Improve your odds of being paid by checking a company's credit rating.

Small and large businesses seek various methods of securing credit terms for products and services to improve their cash flow. Industry standards of thirty- and sixty-day payment terms can provide greater support for businesses that need a cushion between the receipt of goods or services and the deferred invoice date. As a proactive measure, it's a good idea to check a company's credit rating prior to extending any terms or conditions.

Instructions

1. Order a business credit report from Equifax or Experian. Both of these companies are leaders in supplying credit ratings to businesses, and they can provide a detailed analysis of a company's credit experiences.

2. Contact Dun & Bradstreet to check a company's credit rating. Many companies rely on the Paydex Score issued by Dun & Bradstreet. A Paydex Score ranges from 1 to 100, and it reflects the manner in which a business has paid creditors for the past year.

3. Ask for credit references. One of the best ways to check a company's credit rating is to request a few trade references. This is a do-it-yourself approach versus using the credit rating agencies. Have the company supply five references that you can contact. Base the company's credit rating as a percentage of favorable experiences. If four out of five references report that company has a good credit record, you can assign an 80 percent satisfaction rating for this company.

4. Check with the Better Business Bureau. Consumers and business owners report a variety of complaints to the Better Business Bureau. Some items include unfulfilled service contracts, faulty work, excessive charges and failure to pay debts. People rarely contact the Better Business Bureau to indicate that a business is doing a great job, but a quick search may provide some insight about a company that has bad debt or a slow payment history.

5. Conduct an online search using the company's name. This may reveal negative information about a company, such as a lawsuit, tax lien, judgment or bankruptcy filing.

Tips & Warnings

• Check rental references for companies that lease commercial space.

• Checking a company's payment history from multiple sources can give you a better view of their overall credit rating and help you mitigate risks.

References

• Business Credit Report
• Experian Business Reports
• Business Information Report