Business Credit Ratings

GeoffCapes

Member
Messages
14,000
We're just about to start working with a company that can do quite of bit of work for us and our clients and what they do fits in well with us, and the added bonus is they are local.

After they got stung badly on the back of the Carillion debacle they get all new partners D&B (Dunn & Bradstreet) checked.

So last night the M&D comes back to me and says "we have a bit of an issue with your company credit rating".

Basically I am a high risk company (according to D&B) because we don't borrow money, we don't have any debts, and as a private non listed company our books are not available for all to see (unless you pay for them of course).

So basically for 7 years having run my company debt free, credit free, I'm doing it all wrong!
Apparently Carillon had a brilliant credit rating!

WTF????

What is the world coming to where you have to be in debt to be credit worthy?
 

Oneball

Member
Messages
11,075
We're just about to start working with a company that can do quite of bit of work for us and our clients and what they do fits in well with us, and the added bonus is they are local.

After they got stung badly on the back of the Carillion debacle they get all new partners D&B (Dunn & Bradstreet) checked.

So last night the M&D comes back to me and says "we have a bit of an issue with your company credit rating".

Basically I am a high risk company (according to D&B) because we don't borrow money, we don't have any debts, and as a private non listed company our books are not available for all to see (unless you pay for them of course).

So basically for 7 years having run my company debt free, credit free, I'm doing it all wrong!
Apparently Carillon had a brilliant credit rating!

WTF????

What is the world coming to where you have to be in debt to be credit worthy?

It’s the same with personal credit ratings. Unless you’ve used credit there’s no way to get a rating. I’ve a friend who never had credit cards, loans or an overdraft and he struggled to get a mortgage for the same reason.
 

Oliver6796

Member
Messages
497
We're just about to start working with a company that can do quite of bit of work for us and our clients and what they do fits in well with us, and the added bonus is they are local.

After they got stung badly on the back of the Carillion debacle they get all new partners D&B (Dunn & Bradstreet) checked.

So last night the M&D comes back to me and says "we have a bit of an issue with your company credit rating".

Basically I am a high risk company (according to D&B) because we don't borrow money, we don't have any debts, and as a private non listed company our books are not available for all to see (unless you pay for them of course).

So basically for 7 years having run my company debt free, credit free, I'm doing it all wrong!
Apparently Carillon had a brilliant credit rating!

WTF????

What is the world coming to where you have to be in debt to be credit worthy?

It’s bonkers I know. Get yourself a company credit card and use it for you fuel/pay it off in full each month.
When we looked at a mortgage years back my wife had the same issue as she’d never borrowed/cc cards/loans etc.
Similar things when you try and get a mortgage against a property without one, it’s like your a criminal !
 

2b1ask1

Special case
Messages
20,223
Mark, the only credit I've run against my business (not Ltd. or VAT registered) since 2013 has been the fuel genie card which is for Tesco, Sainsbuys and Morrisons fuel only. It is paid off fully every month by DD and has a limit of £2,400 which I have exceeded before now! As all my troubles are now over 6 years ago my rating has been very high personally, I have been like you unaware that the business had its own rating but having just agreed financing on the new van for the business it has just come to light like you.

Seems the fuel card has made the difference for me. Lloyds bank however have VERY stringent rules and it seems they ignore the 6-year rule!
 

GeoffCapes

Member
Messages
14,000
Mark, the only credit I've run against my business (not Ltd. or VAT registered) since 2013 has been the fuel genie card which is for Tesco, Sainsbuys and Morrisons fuel only. It is paid off fully every month by DD and has a limit of £2,400 which I have exceeded before now! As all my troubles are now over 6 years ago my rating has been very high personally, I have been like you unaware that the business had its own rating but having just agreed financing on the new van for the business it has just come to light like you.

Seems the fuel card has made the difference for me. Lloyds bank however have VERY stringent rules and it seems they ignore the 6-year rule!

Ironically someone on Linked In has just messaged me about fuel cards, might look into it.
 

Mattp

Member
Messages
501
It’s the same with personal credit ratings. Unless you’ve used credit there’s no way to get a rating. I’ve a friend who never had credit cards, loans or an overdraft and he struggled to get a mortgage for the same reason.


Same here, in my student days I have had quite a checkered past with credit - all better now, and I was classed as less risk than my wife who had no credit or debt...

You need managed debt to be classed as a low credit risk! Its all crazy! so finance something, or as said grab a fuel/credit card use it and clear it so it doesn't cost you anything, then hey presto, your gravy...

I think its something along the lines of showing that you can handle your debts... much like a recovered alcoholic... tea total is ok, but give a sniff of the good stuff and armourgeddon is on the cards!
 

zagatoes30

Member
Messages
20,763
Always been the case no credit gives you a poor credit rating bizarre but true but never consider it for the business
 

conaero

Forum Owner
Messages
34,594
Tis the way of the world unfortunately.

I have a 999 (maximum) credit rating on ClearScore. This is only because over my life I have borrowed the odd car loan and paid it back without issue and never missed a payment.

If you don't borrow...your not catagorised, its madness.

Send them your accounts and let them see if you are high risk.
 

GeoffCapes

Member
Messages
14,000
Tis the way of the world unfortunately.

I have a 999 (maximum) credit rating on ClearScore. This is only because over my life I have borrowed the odd car loan and paid it back without issue and never missed a payment.

If you don't borrow...your not catagorised, its madness.

Send them your accounts and let them see if you are high risk.

This is the bit I don't get.

D&B call me (my business) high risk.

However, I can get a business mobile phone no problem, a fuel card no problem, and a company car no problem.

Where's the logic?
 

Zep

Moderator
Messages
9,110
I’m not sure I understand what you mean by being debt free. Do you pay for all of your contracts, materials etc on a pro-forma basis? You don’t have credit terms with any of your suppliers?

D&B don’t just look at your books, they looks at your interactions with other businesses, any legal activity, any charges against property (for example you might have an debenture on your house a part of a business loan).

I assume that, as your supplier has credit checked you, that they were looking to give you credit terms on invoices for works.

A lot of businesses in our industry, in the aftermath of the Carillion debacle, now have risk management as part of the business banking arrangements, with the banks insuring their debtors risk as long as the business adheres to their credit assessment systems. They can be overridden by the directors of the businesses in question.

When dealing with new customers, I usually ask for the first contract to be paid pro-forma (unless it is a really big one, then it would be a fair amount up front and then staged payments with applications for payment at agreed milestones).

Why not offer some sort of pro-forma payment on some initial works and see if they shows them your willingness to partner with them?
 

GeoffCapes

Member
Messages
14,000
I’m not sure I understand what you mean by being debt free. Do you pay for all of your contracts, materials etc on a pro-forma basis? You don’t have credit terms with any of your suppliers?

D&B don’t just look at your books, they looks at your interactions with other businesses, any legal activity, any charges against property (for example you might have an debenture on your house a part of a business loan).

I assume that, as your supplier has credit checked you, that they were looking to give you credit terms on invoices for works.

A lot of businesses in our industry, in the aftermath of the Carillion debacle, now have risk management as part of the business banking arrangements, with the banks insuring their debtors risk as long as the business adheres to their credit assessment systems. They can be overridden by the directors of the businesses in question.

When dealing with new customers, I usually ask for the first contract to be paid pro-forma (unless it is a really big one, then it would be a fair amount up front and then staged payments with applications for payment at agreed milestones).

Why not offer some sort of pro-forma payment on some initial works and see if they shows them your willingness to partner with them?

Exactly that Zep. We pay all suppliers within 30 days.
So when we get paid by the client, we pay suppliers.

They were indeed looking to give us credit terms. So we have indeed agreed a pro-forma payment on initial projects which they are fine with.

Always a solution, but just the fact that we have, effectively, no credit history is odd.
 

Zep

Moderator
Messages
9,110
Exactly that Zep. We pay all suppliers within 30 days.
So when we get paid by the client, we pay suppliers.

They were indeed looking to give us credit terms. So we have indeed agreed a pro-forma payment on initial projects which they are fine with.

Always a solution, but just the fact that we have, effectively, no credit history is odd.

Sounds like you need to engage with D&B to understand what data they hold on you.

You do have a credit history, if you have paid on time (and by that I mean that it is within, or close to, the terms, even if you haven’t been paid by your customer) then you probably have a case to ask them to review. If you have withheld payments in the past without issuing notice of a contract breech or renegotiating terms, you might have a problem.
 

Scaf

Member
Messages
6,512
My daughter has no debt, no credit card and therefore no credit history, despite being a homeowner and in full time employment.

She couldn’t even get a mobile phone contact in her own name -

My sister I law is on benefit, has no real income and owes to catalogues, utility and housing association and can still get a mobile phone and add to her debt.

The world is completely mad !!
 

rockits

Member
Messages
9,167
I had the same with my mortgage 4 years ago....couldn't get one! Finally got one then went to remortgage for same amount to a new deal 2 years later. They wouldn't lend me the same amount I already had! Had to pay off a chunk to get it.

I have no debts except mortgage and everything else is bought, paid for and owned.

Maybe there is more available credit for the people that need it more as they are just going to keep it sucking it up!
 

Oneball

Member
Messages
11,075
I had the same with my mortgage 4 years ago....couldn't get one! Finally got one then went to remortgage for same amount to a new deal 2 years later. They wouldn't lend me the same amount I already had! Had to pay off a chunk to get it.

I have no debts except mortgage and everything else is bought, paid for and owned.

Maybe there is more available credit for the people that need it more as they are just going to keep it sucking it up!

Many years ago when you used to send a cheque in the post I forgot to pay my credit card bill two months in a row. No snotty letters or phone calls wanting money instead they doubled my credit limit.