How Does a Business Credit Check Work in NZ?
A business credit check is a look at your company's file held by a credit reporter such as Centrix, Equifax or Experian (formerly illion), plus public records, to judge how likely it is to pay on time. Suppliers run one before opening a trade account, and the result can set your credit limit and whether a guarantee is asked for.
What Gets Checked
Credit reporters differ in what they hold, so exactly what a supplier sees varies. A business report commonly includes:
- Company details: registration date, status, directors and shareholders, from the Companies Register.
- Payment history: how the company pays other suppliers, including serious overdue accounts reported as defaults.
- Court judgments and insolvency notices involving the company.
- Security interests registered on the PPSR, such as a bank's security. See what the PPSR is.
- A risk rating or score, which each reporter builds in its own way.
- Time in business and size, which feed into how much credit looks reasonable.
Business vs Personal Credit Checks
| Business check | Personal check | |
|---|---|---|
| Who it looks at | The company | An individual, such as a director or guarantor |
| What it draws on | Companies Register, trade payment data, judgments, insolvency notices, PPSR | The individual's credit accounts, repayments, defaults and enquiries |
| When a supplier uses it | On every trade account application | Often when a director's guarantee is requested, usually with your authority on the application |
| Your access | Ask the credit reporter what it holds on your company | You can ask each reporter for a copy of your own report |
Personal credit information is governed by the Credit Reporting Privacy Code 2020, issued by the Office of the Privacy Commissioner. The government's guide on how to check your own credit report says you can get a free report from Centrix, Equifax and Experian, and that each has its own process and timeframe.
How It Affects a Trade Account Application
The supplier uses the report with your application and trade references to decide four things: whether to open the account, the credit limit, the payment terms (for example, 20th of the following month or Net 7), and whether to ask for a deposit or a guarantee. The full process is in how a trade account application works.
Illustrative example: a 14 month old Christchurch electrical company applies for a $20,000 account. Its file shows a clean Companies Register entry, two directors and no reported defaults, but little trade payment history. The supplier opens the account at $5,000 on short terms and asks for a director's guarantee. After 12 months of on time payment the company asks for a higher limit. A thin file usually means a lower starting limit rather than a decline, and the limit grows with a record. See what a credit limit on a trade account means.
How to Improve Your Position
- Pay on or before the due date. Serious overdue accounts can be reported as defaults.
- Clear small overdue amounts before you apply.
- Keep Companies Office details current: addresses, directors and filings.
- Be selective. Each check can be recorded as an enquiry, so apply where you actually need an account.
- Check your own file for mistakes and ask the reporter to correct anything wrong.
- Give strong trade references. See what trade references are and how many you need.
- Ask for a modest starting limit and build from there.
A guarantee request often follows a thin file. If you are asked for one, see what you can ask for. More in the Business Credit guide and the Trade Accounts guide. This article is general information, not credit or legal advice.
Frequently Asked Questions
What does a supplier see on a business credit check?
Typically the company's registration details, directors, any payment defaults or court judgments, insolvency notices, security interests registered on the PPSR, and a risk rating. Exactly what is held varies by credit reporter.
Does a business credit check look at my personal credit?
Not by itself. But if a supplier asks a director to give a guarantee, it may also check the guarantor personally, usually with the authority you sign on the application.
Can I see my own credit report?
Yes. You can ask Centrix, Equifax and Experian for a copy of your personal credit report. The government says it is free, and each reporter has its own process and timeframe. To see what a reporter holds on your company, contact the reporter directly.
Is there a minimum credit score for a trade account?
There is no universal pass mark. Each supplier sets its own policy and weighs the report against trade references, time in business and the credit limit you ask for. A thin file usually means a lower starting limit rather than an automatic decline.
Will applying for several trade accounts hurt my credit file?
Each check can be recorded as an enquiry on the file, and many applications in a short period can look like a business that is short of credit. Apply where you actually need an account.
