What to Look for when You Check People’s Credit

If you want to check people’s credit history, you can do that through a variety of different sources. An official credit report, such as the one a bank would complete, is quite a complex process, however. You can only process it if you have received the applicant’s authorization to run the check, for instance. Even if you run a non-official credit check, through one of the many background check facilities that exist online, you will need to make sure you do more than look at a financial history as well.

For instance, someone may have provided you with references to attest to their character. These references will, obviously, all be very positive. However, that does not mean you shouldn’t check them. You can also delve a little deeper, for instance by speaking to their bank about financial behavior, although you do need explicit permission for this. However, through an online background check service, you can find out a lot about an individual, particularly if you have important details such as their name, address, and date of birth.

Questions to Ask when You Check People’s Credit History through References

Some of the questions you can ask the references you are given or come across include:

  • How long they have known the applicant.
  • Whether they have done business with the applicant.
  • What the applicant’s preferred payment method is.
  • How the applicant pays – early, late, or within terms.
  • What the applicant’s usual balance is and how many days they are past due on average.
  • The value of the average order placed by the applicant.
  • How often the applicant places orders.
  • What the current due balance is, and whether it is past due and how long.
  • Whether the applicant has any specific terms with the business.
  • Whether the applicant regularly returns products.
  • Whether the applicant takes advantage of discount offers.
  • What the applicant’s highest rating was in different periods of time.
  • Whether the applicant’s account is completely current right now.

The best place to get a reference is from the bank. However, they are also bound by privacy laws (and quite rightly so), which means that you have to have explicit permission to perform a check. If you have that, some of the things to ask about include:

  • The applicant’s type of account.
  • When their account was opened.
  • What their balance is on average.
  • Whether they have had returned checks.
  • Whether the applicant has any loans outstanding and, if so, whether they are unsecured or secured, and whether they are being paid properly.

Small businesses and credit managers tend to not run credit reports, because the cost is quite high. However, not running such a report has the potential to cost a great deal more. There are numerous ways to perform background checks on people online as well, so if it is truly impossible for you complete a full credit and background check through the official channels, then the online options, which are much more affordable, as a good alternative.