Your personal credit report is probably something you’re already familiar with if you’ve ever applied for a credit card, car loan, or mortgage. But did you know companies have them too? These reports assess a company’s financial health and risk of non-payment.
What are company credit reports?
A company’s credit report summarizes its creditworthiness and financial stability. Banks rely on them when evaluating loan applications. Potential clients and business partners also use these reports to assess the risk of doing business with a company.
In Malaysia, credit reporting agencies (CRAs) regulated by the Credit Reporting Agencies Act 2010 issue company credit reports. For example, CTOS, the leading CRA in Malaysia offers a variety of business credit reports, including both local and international business reports.
What’s included in a company credit report?
The following information is compiled in the CTOS Report by CTOS:
- Directorship
- Shareholders
- Address records
- Financial statements
- Banking repayment history (via CCRIS)
- Litigation information
- Bankruptcy information
- Trade references (via CTOS electronic Trade Reference (eTR))
The credit report draws on data from CTOS’ subscribers, proprietary database and the public domain to create insights into potential customers, business partners and debtors, enabling organizations to improve credit risk management and make confident business decisions at all stages of the customer lifecycle.
Why should I care about the company credit report?
The company’s credit report is valuable for the following reasons:
- Information about a company’s solvency and ability to meet financial obligations: Understanding a company’s financial health is crucial when evaluating them as a customer or business partner. By checking their payment history and ensuring no overdue debts, you can avoid cash flow problems if you decide to onboard them as a customer.
- Insights into the company’s reputation and trustworthiness: The credit report includes details about ongoing litigation, bankruptcy proceedings, or other legal actions that might affect your interactions with them. This is also important for adhering to compliance and anti-money laundering rules, ensuring that you aren’t working with shady or disreputable companies.
- Safeguarding your company from entering into risky relationships: Reviewing a company’s credit report enables you to make informed decisions based on quick access to data. This process protects your company from entering into customer or business relationships that could negatively impact cash flow or reputation.
How do I check a company’s credit report?
You can obtain company credit reports from credit reporting agencies such as CTOS. For starters, you can pull a CTOS Lite Report, which contains insights to help you do basic evaluation of a customer.
To pull a more detailed credit report which includes bank repayment information, litigation information, trade references, and CTOS SME Score from CTOS database, you will need to get the other party’s consent as required under the CRA Act 2010.
With CTOS Credit Manager, this process is streamlined in a dynamic platform to search, store, monitor, and manage all your customer information to reduce business credit risk.
Subscribe to CTOS Credit Manager now to assess your own company and to evaluate your business partners with CTOS reports!
