Guide

How to credit-check a customer

A practical, step-by-step guide to credit-checking a UK customer or supplier before you trade, and keeping an eye on them afterwards.

Why check before you trade

Offering credit is effectively an unsecured loan. A quick credit check before you agree terms helps you avoid a bad debt, set a sensible limit, and decide whether to ask for payment up front or a deposit.

How to run the check

Search the business name to find the right entity, then run a company credit report (or a business credit report for a sole trader or partnership). Read the credit score and suggested limit first, then the public record and accounts.

Setting a credit limit

Use the suggested credit limit as a starting point and adjust it for the size of the order, the public record and your own risk appetite. For a large first order, consider staged terms until the account is established.

Checking suppliers and monitoring accounts

The same check works for a key supplier whose failure would disrupt you. For customers you already trade with, re-check periodically or use monitoring so you are alerted to a deterioration before it becomes a problem.

FAQs

How often should I re-check a customer?

Re-check when you increase a credit limit, when an order is unusually large, and at least once a year for active accounts. Monitoring can do this automatically.

Can I credit-check a customer without their permission?

Yes. Business credit information on UK companies is part of the public and commercial record and can be checked for legitimate business purposes.