When evaluating new customers for credit terms, businesses commonly rely on credit reporting agencies or third-party credit information services to perform credit checks. These services provide comprehensive credit reports detailing the financial history, debt levels, credit score, and payment behaviors of potential customers.
Some widely used credit information services include Experian, Equifax, and Dun & Bradstreet. These agencies offer various business credit report products tailored for new account assessments, providing valuable insights into a company’s creditworthiness. Additionally, businesses may use specialized financial modeling software that integrates credit reporting data to analyze and predict the credit risks associated with new customers.
Internal credit policies often dictate the thresholds for acceptable credit risk, based on retrieved reports. Beyond the aforementioned services, some companies might also use industry-specific credit exchange platforms or consult financial advisors for a more tailored credit assessment approach. The choice of service depends largely on the company’s size, the industry it operates in, and the level of risk it can tolerate.
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