A company credit report is an essential element in establishing and safeguarding your business interests. Whether you're considering a new merger or acquisition, extending credit, or evaluating potential suppliers, a comprehensive company credit report can provide valuable insights into a business's financial health and reliability.
The Company Watch platform allows you to generate a company credit report for any company registered at Companies House. In this blogpost, we'll explore the key elements that go into a thorough company credit report.
1. Analyse the H-Score®
The H-Score® is one of the most powerful tools used to create a company credit report. To date, it offers unmatched accuracy in predicting potential business failures.
How H-Score® works
The H-Score® evaluates a company’s financial health using published financial data and assigns a score from 0 (weakest) to 100 (strongest). Companies scoring 25 or below fall into the Warning Area, indicating a high risk of financial distress. Each H-Score® is benchmarked against industry averages that are developed through curated asset bands.
The H-Score® is also incredibly transparent, making it easy to derive analysis out of the data that’s presented. By integrating the H-Score® into the company credit report, you can assess financial risk in a much more holistic manner.
H-Score® in action
Take this example of a UK-based company on the Company Watch database. As is evident from the image below, in its latest filing in December 2023, the H-Score® is 95, far above the industry average of 46. Consequently, the company is safe from the Warning Area, and any lender can safely extend credit knowing that the company will be able to pay it back.
Of course, for a holistic company credit report, there are other factors to consider, as discussed below.
2. Analyse the TextScore®
TextScore® is an innovative component of the a company credit report. It utilises advanced machine learning to analyse financial reports and predict corporate distress. Essentially, the TextScore® enhances traditional credit assessment methods by examining the language patterns in published financial documents, on top of the financial performance.
How TextScore® works
The TextScore®:
- Analyses text in financial reports of large, active UK companies
- Compares language patterns to those of previously failed companies
- Assigns a probability of financial distress based on similarities
- Cuts through corporate jargon to highlight key risk factors
By leveraging thousands of historical reports, TextScore® has learned to differentiate between companies likely to face financial troubles and those that remain stable. This adds a crucial qualitative dimension to the holistic company credit report, often missing from traditional credit reports.
TextScore® in action
If we take a look at the company below, there’s a few key things to consider. The latest filing shows a TextScore® of 33, which is just slightly above the threshold that would place the company in the Warning Area. This score correlates closely with the H-Score®, and together, the scores compound to create a more powerful risk indicator. The resulting combined score of 16 acts as a significant red flag for lenders, highlighting a higher level of true risk.
3. Flag potentially fraudulent activity with Vigilance™
Vigilance™ is an advanced fraud detection tool integrated into the Company Watch platform for company credit reports. It detects potential discrepancies and irregularities in business operations.
Employing sophisticated anomaly detection algorithms, Vigilance™ can identify issues before they escalate, allowing for proactive risk management.
How Vigilance™ works
Vigilance™ analyses a comprehensive set of warning signs across five key areas:
- Financial,
- Statistical,
- Behavioral,
- Operational, and
- Phoenixism.
When suspicious activity is detected, the system flags the company in yellow, allowing users to drill down into specific triggers. In combination with the H-Score® and TextScore®, it allows for a more holistic company credit report.
Vigilance™ in action
The company below has a Behavioural Vigilance™ flag associated with it, highlighted in yellow. By clicking on it, we’re able to delve deep into the details of the flag. As can be seen below, the company in this instance is not registered for VAT, and the turnover for the company exceeds the VAT threshold.
A company may avoid VAT registration despite exceeding the threshold to evade taxes, manipulate cash flow, or conceal fraudulent activities, which can raise serious concerns. This information may or may not influence decisions that we make around partnering with or lending to this company.
3. Analyse company filings and legal judgments
Often, company filings and legal judgments are able to tell us a lot about how the company is doing financially and what their plans are for the future. Of course, document filing in itself is not a red flag. However, based on what documents are filed and when, we can make decisions around partnerships and lending activities.
Two of the key documents that signal distress are:
County Court Judgments (CCJs)
CCJs frequently serve as a precursor to more severe legal proceedings, and are widely recognised as a key indicator of financial distress.
For instance, the company shown below has multiple unsatisfied CCJs, flagged on our platform since 23rd December 2024. In this instance, we can see that a Notice of Intention to Appoint Administrators was then later filed by the firm on the 7th November.
Notice of Intention to Appoint an Administrator (NOIAAs)
A NOIAA is filed with the court to outline that a company intends to go into administration if a solution cannot be found to its immediate financial problems.
For instance, the company below filed a NOIAA on 6th February 2025. The official Gazette posting about the company going into administration went out on 12th February 2025. The Company Watch database was able to flag potential administration days in advance.
4. Get an AI report overview
Stela - AI Report is an innovative functionality integrated into the Company Watch platform, designed to enhance the company credit report. This AI tool generates comprehensive financial summaries of companies in a single written report.
How Stela - AI Report works
Stela - AI Report transforms financial data from the CW database - such as sales, H-Score®, court filings, and more - into clear, professional reports designed for financial experts. By automating this process, it saves users significant time compared to manual report creation.
The system also incorporates information from official sources, like government databases, and carefully checks and organises all data to ensure accuracy and usability.
Conclusion
H-Score®, TextScore®, Vigilance™, documents filed, and Stela - AI Report are just some of the key features that make up a comprehensive company credit report with Company Watch. As a Company Watch user, you can also view financial trends, director information, payment practices, and more.
Start your free trial to instantly begin analysing the financial health of UK companies.
