(Updated: 4 June 2024)
Before starting a joint project with an individual or business, it is imperative to know who you are dealing with. This is where a credit check can be extremely beneficial. Let us take a closer look at what a credit check is, why it is important, and how your business can benefit from it.
What is a credit check?
A credit check is a form of vetting performed when a business wants to evaluate the creditworthiness of a potential borrower. It involves reviewing one or more of your credit reports and can include your full credit history (payment reports, judgements, and other relevant data) maintained by the national credit bureaus.
Banks, credit unions, or lenders are types of businesses that will use credit checks to better determine whether to issue you credit and to set the interest on that credit. Credit checks can be used by various industries to determine the following:
- Financial trustworthiness when applying for a rental property.
- Financial security when applying for a job.
- Financial obligations currently in place when looking to purchase a car on credit.
It is through a credit check that businesses gain a full view of a company’s financial situation and determine whether it is responsible to do business with this company.
Why are credit check important?
As credit checks help companies gain a full understanding of the financial health and creditworthiness of a company or customer, it can help you determine whether you should go into business with them. Businesses who fail to run a credit check run the risk of extending credit to a potential business partner or customer who cannot pay them back, impacting their bottom line.
What are the benefits of a credit check?
There are several advantages to running a credit check on a perspective supplier, company, or customer. Let us take a closer look:
- Reduce Risks: Running a credit check helps you reduce the risks of a default by being able to view the paying behaviour of the potential borrower, identify any issues with late payments, or past bankruptcies etc. Thus protecting the financial health of your own business.
- Setup Credit Limits: By establishing a borrowers’ creditworthiness, you can set up reasonable credit limits that can help you further protect your business, whilst you establish the borrowers’ reliability when it comes to repayments.
- Determine Interest Rates: By evaluating your risk, you can determine the appropriate interest rate to match the risk.
- Maintain Positive Cash Flow: The creditworthiness and credit limits you set can assist in generating reliable cash flow, as your business can make strategic decisions to target the right prospects who are most likely to become fast-paying customers.
- Making informed decisions: By gaining clearer insights into the financial capabilities of the company you are doing business with, you can make informed credit decisions. A credit check allows you to determine the health, viability, and sustainability of a potential long-term partner.
How our commercial credit reports help
The more information you have on a company, the better informed your business decisions are. MarisIT’s commercial credit report services can give you access to comprehensive information on virtually every credit-active company in South Africa.
Through our easy-to-use online web-based service, you can enjoy an all-in-one credit risk management solution for credit scoring and vetting.
Here are some of the commercial credit vetting report examples you can get from MarisIT:
- TransUnion Company Reports: Get current, comprehensive information on virtually every credit-active company in South Africa.
- CIPC (Old Cipro) Company Reports: This will contain the details on companies, close corporations and their director and member information.
- CIPC (Old Cipro) Director Reports: This will contain the details of directors and members and what companies or close corporations they are linked to.
- Compuscan Company Search: Get an insight into the current status of all companies registered at the CIPC, to establish the creditworthiness.
- XDS Business Enquiry Reports:
- XDS CIPC Report contains the Vat & Tax No.
- XDS Standard Online Report contains the Vat, Tax Number, Company judgments and Adverse information.
- XDS Detailed Online Report contains the Vat, Tax Number, Company & Principal Judgment, Adverse info and Deed information.
How our consumer credit reports help
Assess a credit applicant’s ability to repay on a financial agreement by receiving extensive information about the consumer credit rating of the specific individual.
Through our easy-to-use online web-based service, you can enjoy an all-in-one credit risk management solution for credit scoring and vetting.
Here are some of the consumer credit vetting report examples you can get from MarisIT:
- XDS Consumer Credit Reports: Our consumer credit report provides extensive information about the consumer credit rating of the specific individual.
- XDS Credit4Life Reports: Credit4life will help you understand the consumer’s credit data, how they monitor their accounts and credit profile.
- Compuscan My Credit Check Report: My Credit Check will help you understand your credit data, shows you how to monitor accounts, manage debt and improve your credit profile.
- Compuscan Consumer Report: Receive contact information as well as public domain records such as Judgments and Adverse information if any are recorded.
- TransUnion Consumer Report: You will receive contact information as well as public domain records such as Judgments and Adverse information if any are recorded.
Conclusion
In a competitive and risk-prone environment, knowledge is power. By properly vetting potential customers or business partners, you will minimize your debtor’s liability. The foundation of a good vetting procedure is accurate real-time data to make sound strategic decisions.
Find out how our online platform can minimise your risks and help grow your business.
