Credit check
What is a credit check?
A credit check is a look-up on current or prospective customers that provides a financial insight into their financial situation.
Credit checks can be carried out in many ways and depend very much on whether your customer is a private or business customer.
In this post, we focus on credit checks and how you can do them yourself.
Why do credit checks?
There are many reasons to run credit checks on your customers, whether they are private or business customers.
On the other hand, companies that run regular credit checks often experience fewer bad payers and thus a better bottom line.
With fewer bad payers, the company can focus on the customers who actually pay their invoices and spend less time on those who don't.
Secondly, running regular credit checks on your customers can help ensure that customer data is up to date and current, so that the name, address and other general information about a customer is always up to date.
How to do a credit check?
There are many ways to do credit checks, and you can even go a long way with a wide range of existing and free online tools such as Proff.dk and CVR.dk, if your customers are exclusively business customers.
If you want to run a credit check on a business customer, you can do so through CVR.dk, for example, where you can see the company's public accounts. CVR.dk also shows where the company is located and who owns the company.
However, CVR and Proff are far from perfect, because an important parameter, namely historical data for payments, is missing.
If you are a private customer, it is immediately much more difficult to do a free credit check, as we have very few online databases of private individuals in Denmark. But one place to start a background check is various search engines, krak and 118.dk. These can give you an insight into the person, but far from the financial history.
We always recommend that you run your credit checks based on one or more debtor registers, such as Experian (formerly RKI/Ribers) and/or Qatchr.dk(Debitorlisten). This is where you will find the most relevant data.
Who should make one?
Basically, no customer who deals with private individuals and other businesses on a regular basis can protect themselves against bad payers, regardless of whether or not you run credit checks. But if your business uses credit checks, you are well on your way.
It is particularly recommended for businesses that either have many customers coming through frequently or few but large customers coming through to consider credit checks.
How much does it cost to run a credit check?
In the past, credit checks were the preserve of the few, and running credit checks on your customers was often costly and time-consuming.
Today, fortunately, it is cheaper than ever before, and for example Qatchr.dk (owned by Collectia A/S), offers a completely free credit check to see if it is something for you and your business.
