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The negative value of credit searches

Absolutely Bizarre! As Portland, we have just applied to open a credit account for a £20 monthly recurring charge and been told we do not pass the credit check and therefore cannot open the account!....

This is despite the fact the company has been operating profitably for 12 years, has four professionally qualified directors, has never had any bank borrowings, holds cash at bank in every year’s accounts, and has significant reserves on the balance sheet and always pays its debts in full and on time.

The quality of the information being provided on the credit check, which after all is supposed to be measuring the risk to the supplier, can be summed up by the fact that they give our trading address as being 12 Portland Street, an address we vacated 8 years ago! If we did decide to abscond, thanks to the credit reference company, they wouldn’t even be able to find us.     

What is even more amazing, is that a business looking for customers is unable to work out for themselves that the document provided to them is rubbish, all correspondence between us, the telephone number, our website, any internet search on ‘Portland business’ will all show our correct address. If they cannot even get our address right what hope have they of understanding our financial position.

 What does this mean?

 It means:

  1. That in the information age – much of it is unreliable rubbish
  2. Companies that are unable to apply any common sense / logic to their credit risk, will loose good business
  3. If the information about good companies is bad, how reliable is the information about bad companies?
  4. Being in business is about assessing risk and making good judgments – if you try to subcontract that to others you put your business at their mercy

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