Business credit rating

Business credit rating is about all the things that happen around credit rating of businesses, regardless of company form and ownership structure.

Business credit ratings are carried out every day by companies, banks and lenders dealing with other businesses.

A company's credit rating helps minimize or even avoid bad debtors by gaining financial insight into other companies' circumstances. In this way, it serves as a tool in the creditor/lender's credit policy.

The credit rating of a company's business customers enables the creditor/lender to make decisions about the debtor's credit, loan conditions and the like, and from there set its terms and policies.

Read also: Business credit rating

What does a business credit rating include?

A credit assessment, regardless of whether it is carried out on a private individual or a company, should always be based on the circumstances that the lender/creditor wants to know about. This means that there is no definitive answer to what a credit rating should and must contain; it is basically up to the company/creditor itself.

But a typical business credit rating often includes:

• Information from the company's latest public accounts
• Ownership
• Loan conditions
• Previous bankruptcies
• Company status
• Possible assets

Who should conduct business credit assessments?

If you are a business that trades with other businesses and provides credit or loans to them, you may want to introduce credit scoring for your customers.

Credit ratings are primarily used by banks and increasingly private companies to align their policies and credit policies.

If you deal exclusively with businesses or private individuals and have only cash sales where no credit is granted, then credit ratings may not be for you.

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