What is a Company Credit Check?

Before we get into the red flags to look out for on a UK company credit check, let’s discuss what a company credit check is. A company credit check involves a company’s financial history and is used to determine its creditworthiness. Similarly to a personal credit check, this information is then used to assess the risk of lending credit to that company. It is a way of performing due diligence before committing to any financial agreement that could pose a threat.

What information does a credit check on a company include?

A credit check on a company in the UK will involve looking at a lot of different financial information about the company, such as: 


  • The company's name, address, and registered number
  • The company's financial history, including its annual turnover, profits, and liabilities
  • The company's credit history, including any defaults or late payments
  • The company's directors and shareholders
  • The company's legal status

There are various reasons why company credit checks are run. Assessing a company’s financial stability before going into business with them is probably one of the most common reasons for this. But, you may also want to run a company credit check on a customer to see whether or not they are able to honour their financial obligations to you. 


For an easy way to access a variety of company credit checks, visit Creditserve today! 

Red Flags to Watch Out For 

If you have never run a company credit check before, there are a few red flags to look out for that will help determine the creditworthiness of a company. Let’s go into these in more detail. 

County Court Judgments (CCJ)

A CCJ is a court order that has been issued against a company due to failing to pay back debt. 

So, if you have performed a company credit check and a CCJ pops up, you want to be very cautious about going into business with them. It is important to note that a company can have multiple CCJs against its name, too.                                             

Poor Financial Performance

Declining revenue, negative profit or mounting liabilities. These are all things to consider when performing a company credit check. According to an analysis conducted on the performance of businesses in 2021, 18% of businesses stated that they had made a loss for the period between Q1 and Q4. 

Additionally, with the conclusion of Q4 in 2022, 53% of SMEs were borrowing more money than they had ever done before the global pandemic. This is something to watch out for when completing your company credit check. 

Frequent Changes in Directors

Let’s face it; a high staff turnover is never a positive sign. If your credit check has produced frequent changes in directors, it could indicate internal instability. This is probably not the type of company you want to invest in. 

Complicated Group Structures

Having a complex group structure can make it difficult to trace your way back to the owner of the company. 

If you struggle to find out who the owner of the company is, you will struggle to find out who is financially responsible for any loans or debts. A company could be hiding any financial problems with a complex group structure. 

Change of Ownership

Additionally, if a company has had a recent change of ownership, this may also be a cause for concern as it could make the company seem unstable. 

Although not all changes of ownership are necessarily bad, the thing that you want to ensure is that the company continues to be reliable financially. 

High Credit Utilisation

If most of a company’s available credit has already been used, you may want to proceed cautiously before relying on them to pay back their debts. This may be a telltale sign that the company is over-reliant on credit to finance its operations. 

Negative Public Perception or Media Coverage

Although negative media coverage doesn’t necessarily give insight into how a company handles their finances, it could have a negative impact on the financial gain of a company. 

As you can probably imagine, bad publicity can lead to a loss in customers for a company which will have a negative impact on their finances. 

Sanctioned Companies or Individuals

If a company, or any of its key personnel, is on the sanctions list, you should take this as another red flag because this can pose as a compliance risk for your own company. 

Sanctions are put on companies, either by the government or international companies, to put restrictions on in order to achieve specific foreign policy or national security measures. 

By your company engaging with other companies on the sanctions list, you put your company at risk of financial penalties, legal ramifications, or reputational damage. 

For any further information on this, feel free to reach out to us at Creditserve on LinkedIn

Politically Exposed Persons (PEP)

A Politically Exposed Person (PEP) is a person who is usually trusted by the general public. PEPs include people like politicians, who hold a lot of power and who may have access to public funds, for example, making it easier to launder money. 

So, it is important to do your due diligence and to ensure that if a company you want to do business with has ties with PEPs, the appropriate checks are made to ensure that there is no illegal financial activity taking place.

Frequent Credit Report Views

Having numerous credit checks being undertaken on a company could also pose as a risk because it could mean that the company wants access to more credit or that other companies are checking their credit score because they owe them money. 

As you can tell, it is crucial to look out for various red flags that may pop up on a UK company credit check. By failing to do so, your company could face financial implications and reputational damage that it may be unable to recover from. 

If you need to undertake a company credit check and are unsure how to do so, Creditserve can give you instant access to company credit checks and reports on UK companies.