Do I need permission to perform a business credit check?

When conducting a business credit check on a prospective client, the process and legal requirements differ significantly depending on the business's legal structure. If you are dealing with a limited company, all the information you need is in the public domain. As you may be well aware, there are 3 main legal types of businesses: 

  • Limited Companies
  • Sole trader
  • Partnership

Things are more complex when you credit check a business that's a sole trader or a partnership. Since these business types are not separate legal entities, the owners are personally responsible for the business's debts. This means a proper credit assessment requires you to check the personal credit history of the business owners. 

A basic online search might provide some public information without permission, but to get a comprehensive view, you will need to perform a hard search at their residential address, as the business owners are personally responsible for the finances of the business. Therefore, it's crucial to have a signed credit application form that includes a clause granting you permission to run a credit check on the owner as well as the business.

Information on any prospect should be initially gathered through the business filling out a credit application form, which should be signed by one of the owners. Part of the application form should include a paragraph stating that you will run credit checks on both the business and the individuals, where applicable.

In this article, we’ll explain more about the process of checking a business credit score and whether or not you should let a business know that you’re running a business credit check.

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The process of credit checking a business 

So, you are in contact with a new business that you are looking to work with in the future, and you wish to check their business credit score. When running a check with Creditserve, head to our online shop to purchase your package: one check, 50 checks, 350 checks or unlimited checks. 

When carrying out a business credit check with us, you’ll need to know the name of the company that you’re searching for or its company registration number. With our software, you can search by the company name, company number or postcode. You’ll also be asked to input whether the company is limited or non-limited. You can also filter your search to include dissolved companies. 

Once all the correct information has been input, this should pull back the company in question or perhaps a small list of companies to choose from. Simply select the correct one and receive your credit report. 

Our system will present the following information for you to review: 

  • Credit limits
  • Risk scores
  • Company incorporation details
  • Individual directors, including other directorships
  • Shareholders and their shareholdings
  • Mortgages and charges
  • Five years of financial data where available
  • Legal notices
  • CCJs

 To get a better idea of what to expect from a UK business credit check, view our sample report. 

Should I tell a business that I am checking their business credit score?

Whether or not you tell a business that you are checking their business credit score is totally up to you. You are not obliged to; however, it’s also not something you should feel the need to keep quiet about, either, as checking business credit scores is pretty commonplace when doing business responsibly.  

It’s worth mentioning that this is not the case when running an AML check, though. When running an AML check, the subject of the enquiry must be made aware that the search will be carried out on them.

I’ve checked the business credit score, and it’s low - what now?

So, what do you do if you’ve checked the business’s credit score and read through their credit report, and things aren’t looking great? At what point do you rethink the situation and potentially decide to decline to work with them?  

Firstly, if you’re unsure what constitutes a bad credit report, these are a few of the red flags to look out for: 

  • Outstanding debts
  • Insolvencies
  • A history of CCJs
  • Poor financial records
  • Poor credit history
  • Directors who have other failed companies  
  • A lack of transparent financial records, such as filing abbreviated accounts
  • Legal notices like winding-up petitions

If you’ve spotted these red flags and you’re not comfortable going ahead, you are within your rights to decline proceeding with the business relationship. Alternatively, you may decide to go ahead with the partnership and take the risk. Perhaps you know that their market is set to do well this year, or you know that there is a good reason why their credit report doesn’t look great. If you do decide to go ahead, it’s a good idea to take a few steps to protect your business, such as perhaps implementing a proforma invoice policy.  

Working with a Limited Company 

When dealing with a limited company with a poor credit score, a potential supplier could also look to seek personal guarantees from the directors and or shareholders.  A personal guarantee is a legally binding promise that would be made by the director or shareholder to accept personal liability for the limited company's debts. 

So, if the business defaults on its payments and becomes insolvent, you’ll be able to legally pursue the individual who signed the guarantee to recover the outstanding debt from their personal assets, such as their home or savings. A personal guarantee bypasses this protection, despite any previous financial protection. 

By signing the guarantee, the director will voluntarily give up their limited liability shield for the specific debt in question. 

Business credit reporting  

If you’re looking to review a business credit report, look no further than us here at Creditserve. We’ve been in business for 30 years, and many of our clients have been with us since the beginning. We pride ourselves on providing a combination of speed and cost-effectiveness, and online credit reporting with a very personal service. 


Choose from a range of online credit reporting services, from business credit checks, international credit checks, AML searches and more. Head to our online shop to purchase your package or to get in touch, please give us a call on 01992 414222 or email sales@creditserve.co.uk.