What Is A Credit Reference Agency?


A credit reference agency is an independent organisation collecting and storing financial data about a business or individual. This data is used to calculate a business credit score. Businesses use this score to determine risk, and whether or not to extend credit to a person or another company. 

At Company Watch, we provide comprehensive company credit information to help your business identify, assess and mitigate financial risk. 


What is a company credit score and credit report?

Company credit score

A company credit score is the measure of a business's creditworthiness. Scores range from 0 (representing higher risk) to 100 (representing lower risk). Scores are calculated using company information, including payment performance, legal history and company financials. Not all credit reference agencies calculate credit scores in the same way. 


Company credit report 

Credit reference agencies provide company credit reports with detailed financial information on your potential clients, suppliers and partners. A credit report can provide in-depth information to help you mitigate financial risk. They can also help you monitor competitors, run a health check on your company, or carry out due diligence. 


How are simple credit scores calculated?

Credit scores are traditionally calculated using a scorecard approach. A company is judged against several criteria, indicating financial health. This generally includes a company’s age, management structure and annual income. Each data point is given a different weighting, and the results are combined to calculate the overall business credit score. Scores are usually based on how likely the company is to pay a supplier within a 30-60-day period. 


Where do credit reference agencies get their data from?

Credit reference agencies pull their data from official registers and sources, including:


Why must a business use a credit reference agency?

Mitigate financial risk 

Using a credit reference agency can help you avoid working with unreliable or untrustworthy businesses. For example, if a company credit check reveals a customer has a history of late payments, you can steer clear of them.


Recognise fraudulent activity 

A comprehensive company credit check can flag suspicious activity in a company's records that could indicate fraud. For example, if a company has changed its name and address multiple times, or a director has previous prosecutions. By alerting you to these warning signs, you can conduct enhanced due diligence before putting your company at risk. 


Avoid reputational damage

Working with an unreliable company can pose reputational damage to your business by association. Running a credit report on potential partners can help you avoid being tarred by the same brush. 


Gauge your market position

A credit reference agency can run credit health checks on your business. This lets you see how you stack up against your competitors and focus on potential areas for improvement. A credit report can spot weaknesses in your portfolio or supply chain that you might have missed.



How Company Watch do things differently 

So, how do you find the best credit reference agency? Not all credit reference agencies offer the same level of service. Many rely heavily on AI and basic credit scoring. In uncertain times, you must be confident that your company credit checks are robust enough to protect your business. 

At Company Watch we use various unique, industry-leading scoring and forecasting tools that are head and shoulders above the competition. This cutting-edge technology will give you unparalleled insights to make confident, data-driven decisions. Our solutions harness the power of machine learning while maintaining transparent, easy-to-understand reporting.


More than a black-box credit score

Most credit reference agencies provide a simple “black-box” score. These scores are becoming increasingly common as companies heavily lean on machine learning. This often means it’s impossible to establish the basis for the score created. This lack of transparency around the criteria used can lead to more risk.

Basing your business decisions on a black-box credit score can leave your business vulnerable. If you can’t determine the factors that influenced the score, you can’t determine that they reflect your risk management priorities. Your business may be more or less susceptible to certain kinds of risk. You run the risk of risky companies slipping through the cracks or avoiding a company that may pose little danger to your business. 

Choosing a credit reference agency that can provide comprehensive and transparent credit checks and credit reports is vital to safeguarding your business. We’ve created market-leading risk management tools, like H-Score® and TextScore®, to give you an unbeatable edge when managing risk.


The Ultimate Guide Company Credit Score


H-Score® - Supercharge your risk management 

When predicting the likelihood of business failure, H-Score® blows the competition out of the water. This innovative tool is designed to give you a full picture of a company’s financial health. It predicts around 90% of UK public insolvencies in advance, and is widely used across banking, insurance and corporate credit functions. 

Our H-Score® is calculated by scrutinising a company’s financials from all angles. This includes factors such as:

  • Profit management
  • Liquidity 
  • Asset funding 
  • Working capital management

Results are compared to companies that are similar and have subsequently failed. We then use this to calculate the likelihood of a company failing also. The company receives a score between 1-100, displayed graphically. If the H-Score®  is 25 or under, the company is placed in our Warning Area, indicating a high level of risk and probability of distress. The vast majority of companies that go on to fail were previously in our Warning Area.


TextScore® - Cut through corporate jargon

TextScore®  is our unique tool that harnesses advanced machine learning to delve into the text of financial reports of publicly listed, and large private UK companies. It analyses the sentiment of thousands of words and phrases in seconds and predicts the likelihood of corporate distress. If language patterns are similar to a failed company, the company in question may also be at risk. Just like H-Score®, a score between 0-100 is given. 


Combined Score 

A company’s  H-Score® and TextScore® are weighted together to create a Combined Score. Our combined score is one of the reasons our company credit checks are the best on the market. The exact weighting is determined by the industry sector in which the company operates. This weighted combination of H-Score® and TextScore® is the most accurate predictor of company distress on the market.  

We’ve also created a range of other cutting-edge products working alongside H-Score® that set us apart from other credit reference agencies in the UK. 


Here are some of our favourite products and solutions:


Our market-leading tool 

How it works 


This unique tool grants you the ability to stress-test a company's financial health and run ‘what if’ scenarios using management accounts or forecasts.

Forecast View™

Forecast View™ is our state-of-the-art financial modelling tool that helps you spot future risks. This unique tool gives you an insight into the impact that economic events might have on the future financial health of UK companies


This tool lets you quickly search the Companies House database for keywords or phrases in the text of annual reports held at Companies House.

Probability of Distress (PoD®)

Used for bad debt provisioning, (PoD®) gives you the percentage probability that a distress event, such as a business failure, reconstruction or acute financial distress, will occur within one to three years.

Data Search 

Data Search lets you filter the entire UK company population to identify companies with a specific profile. You can identify business development opportunities and uncover signs of potential distress. 



Work with Company Watch 

Managing risk in a turbulent business landscape can be a challenge. The peace of mind from working with a trustworthy credit agency is worth its weight in gold. At Company Watch, we have a proven track record of providing our clients with unparalleled insights helping them make confident, data-driven decisions. As an award-winning agency, we’re confident we can help you take the guesswork out of your risk analysis and future-proof your business. 


Our plans start from as little as £354 per month with the flexibility to tailor your package to your risk management needs.  Packages start from basic bronze to our comprehensive gold package, so you can choose the level of access that suits your team's requirements.


Try before you buy

Why not arrange a free trial to test our platform and industry-leading tools before committing - you won’t be disappointed. 

Free Resource

We lift the lid on how company credit scores are built and applied, by credit reference agencies, to provide financial risk solutions.

Download your free copy today.

Ultimate Guide: Company Credit Check ⬇️


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