Credit Reports

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Frequently Asked Questions


Top Questions

No profit and loss or turnover filing requirements for a Limited company

Why are there no accounts on my report?

Why isn't there a credit rating or risk indicator score on my report?

Mortgages and Debentures

Do you provide reports other than in the UK?

How can I see my own personal credit report?

Data Protection and Data Protection Registration

Abbreviations and Codes used in reports

Glossary of credit and financial terms

Contact details for other Credit Reference Agencies and information providers

First Report Risk and Credit Limit Methodology

Experian Delphi Risk and Credit Limit Methodology

What to do when First Report and Experian Delphi Credit Limits are different?

The Net Monthly Credit Rating and Maximum Credit Rating explained

Formulas used for financial ratio analysis

Company Valuations

No profit and loss or turnover filing requirements for a Limited company

It is quite possible for a limited company report to contain no profit and loss and/or turnover figures, or that this information is missing for particular years. This is because the company concerned is exempt from disclosing these accounts according to the Companies Act (1985, revised 1989), and has chosen not to file this data, instead filing 'abbreviated' accounts. If the company is a 'small' company as defined by the Companies Act, then that company is exempt from filing profit and loss and turnover. If the company is a 'medium-sized' company as defined by the Companies Act, then it is required to file a profit and loss account but does not need to disclose its turnover. If profit and loss and turnover information for the company has been filed at Companies House our reports would show this.

Accounting exemptions for small companies.

In most cases, small and medium-sized companies and limited liability partnerships (LLPs) are entitled to submit abbreviated accounts to Companies House - which means they have to provide less information.

For financial years starting before 6 April 2008, to be a small company or LLP, you must meet at least two of these three conditions:

  • annual turnover must be £5.6 million or less
  • balance sheet total must be £2.8 million or less
  • average number of employees must be no more than 50

For financial years starting on or after 6 April 2008, a small company (not LLP) must meet at least two of the following conditions:

  • annual turnover must not be more than £6.5 million
  • the balance sheet total must not be more than £3.26 million
  • the average number of employees must not be more than 50

For financial years starting before 6 April 2008, to be a medium-sized company (not LLP) you must meet at least two of these three conditions: 

  • annual turnover must be £22.8 million or less
  • balance sheet total must be £11.4 million or less
  • average number of employees must be no more than 250

For financial years starting on or after 6 April 2008, a medium-sized company (not LLP), must meet at least two of the following conditions:

  • annual turnover must be no more than £25.9 million
  • balance sheet total must be no more than £12.9 million
  • the average number of employees must be no more than 250

Small and medium-sized LLPs can take advantage of the higher thresholds for accounting periods starting on or after 1 October 2008.

Even if a company or LLP stops being small or medium-sized through expansion, it will still be regarded as such for one financial year afterwards. If it then reverts to being a small or medium-sized company the following year, the exemption will continue uninterrupted.

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Why are there no accounts on my report?

It is possible that your limited company report does not contain accounts, most likely because the business is either not a Limited company, or because the company concerned is a relatively new company or it is dormant. Non-Limited Businesses are not required to file financial data for public record. Only Limited liability companies file information for public record at Companies House. A new company is given a lengthy period following its incorporation before which it needs to file accounts. It can choose to extend its accounting period from the usual 12 months up to a maximum of 18 months. Additionally it is allowed the normal 9 months (6 months for PLCs) in which to prepare accounts, giving a maximum of 27 months (24 months for PLCs) from the incorporation date before having to disclose its first set of accounts. A dormant company does not need to file accounts as it does not trade on its own account. Instead it may be carrying out business as part of a group or on behalf of a holding company.

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Why isn't there a credit rating or risk indicator score on my report?

The Credit Rating and Risk Indicator Score apply to limited companies only. Check first to make sure that the subject company is a Limited company and that the registered number of the company you are interested in is the same as the one on the report. Please note that for non-limited businesses the only official information available is court records. We do provide a credit guide for non-limited businesses, although this is suppressed when adverse data has been recorded. We will supply a Credit Rating and a Risk Indicator Score on most Limited company reports. However, it is sometimes not possible to do so when there is not enough information filed at Companies House to formulate an assessment. In this respect there are a number of possible reasons why either or both the Credit Rating and Risk Indicator can be absent from a report. For example it may be that the subject company is quite new, in which case it may not have been trading as a Limited company long enough to file any accounts and will therefore not have enough of a track record for either a Credit Rating or Risk Indicator to be assigned. Another possibility is that the company is dormant, and similarly there may not be enough information to assign a Credit Rating. Occasionally there is no Credit Rating or Risk Indicator available until a report update has been carried out. Very occasionally the Risk Indicator Score is suppressed if under special circumstances there is a manual override of the data on a report.

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Mortgages and Debentures

A mortgage is a loan usually to finance the purchase of property and usually with specified payment periods and interest rates. Debentures are loans that are usually secured and are said to have either fixed or floating charges with them. A secured debenture is tied to the financing of a specific asset such as a building or a machine. Then, just like a mortgage, the debenture holder has a legal interest in that asset and the company cannot dispose of it unless the debenture holder agrees. Debenture holders can receive their interest payments before any dividend to shareholders. If the business fails the debenture holders will be preferential creditors.

When a company raises a Mortgage or has a Debenture applied we send out Monitor alerts to clients who have placed the company on Monitor. It is possible to obtain more details about the Mortgages or Debentures from companieshouse.gov.uk. We send out the alert soon after Companies House is advised about the mortgage, so it can be another 2 weeks before the information is processed at Companies House and available on public record.

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Do you provide reports other than in the UK?

We provide international reports on over 270 countries worldwide. Prices vary depending upon the country, the difficulty in obtaining information on the specified company and the time scale within which the report is required. We cannot guarantee providing a report within the requested time, although we do our best to achieve this. We will provide you with as much information as possible on the company concerned, although please note that few countries require businesses to disclose as much information as in the UK and we cannot therefore guarantee the amount of information that will be provided, although we can often give you a broad indication of the kind of information you may receive according to what we know about the country's particular filing requirements. If enough information can be obtained we usually provide a credit opinion.

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How can I see my own personal credit report?

You are entitled to see a copy of your own credit file. The Data Protection Act (1998) does not permit you to obtain this from us, or for us to provide this to you; we are unable to provide you with a consumer (or individual) report on you or members of your family. Individuals who wish to see the information contained in their credit file held by credit reference agencies can write to the agencies concerned or apply on the agencies' websites. For full details about personal files and the agencies which hold these files you can visit the Information Commissioner's Office website at ico.gov.uk. The main consumer credit agencies also provide services to enable internet access to your own credit report online.

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Data Protection and Data Protection Registration

The Data Protection Act requires any individuals and businesses (including overseas companies) to be registered in order to obtain UK consumer checks online. Consequently you will need to provide us with your Data Protection registration number. Please note that this should not be confused with a Consumer Credit Licence which is entirely separate. It may be worth checking first with your own company to confirm whether it does not already possess a Data Protection registration number, or whether your registration needs to be renewed. If you need to register do so here Online Notification Process.

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Abbreviations and Codes used in reports

Click here for a full list of Abbreviations and Codes in reports.

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Glossary of credit and financial terms

Click here for a full Glossary of terms used in reports.

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Contact details for other Credit Reference Agencies and information providers

Experian 0115 941 0888
Equifax 0845 603 3000 option 6
Dun & Bradstreet 01628 492000
Graydon 020 8515 1400
Registry Trust Ltd 020 7380 0133
Companies House 0303 1234 500
Charities Commission 0845 300 0218

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First Report Risk and Credit Limit Methodology

Whereas the Experian Delphi model is quantitative, the basis of the First Report model is analytical. Although there is an overlap, the underlying methodology is different. The First Report Credit Limit is intended as a guide for trade credit. The First Report model is based on individual analysis of thousands of company accounts. Company accounts were manually appraised and 'acceptable risk' credit limits were calculated for each company. If the accounts presented unusual features the analysts conferred in order to reach a decision. The result of the manual analysis was converted into a credit rating model which has then been tested again with further manual appraisal on live company accounts over several years.

A 'Qualified' opinion indicates that although the credit limit stated appears realistic on the basis of the analysed financial status of the company, other factors may influence the ability to meet financial obligations. Additional care and further investigation may therefore be required. Where our reports include a full analysis this analysis will normally include reference to qualifying factors for consideration. Factors that may result in a qualified opinion include a qualified auditors report, lack of trade creditors, CCJ data, a parent company, or late filing of accounts. The First Report limit may also be qualified when the Experian Delphi credit limit is known to be lower.

A 'Suspended' opinion indicates that although the credit limit stated appears realistic on the basis of the analysed financial status of the company, the company has filed later accounts than those analysed. In these cases it is normally advisable to request a revised report based on the latest accounts. Within the First Report model a suspended indicator takes precedence over a qualified indicator, so a suspended indicator does not exclude the possibility of other factors that would otherwise have resulted in a qualified opinion.

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Experian Delphi Risk and Credit Limit Methodology

The Experian Delphi score combines market leading expertise in credit scoring techniques with a unique combination of data assets to deliver unrivalled accuracy in credit ratings. There are certain characteristics that are highly predictive in assessing rapid changes in a company's trading position and can be regarded as particularly important. These are: average current days settlement beyond invoice terms; analysis of payments compared to the industry averages; county court judgements in associated companies of the directors; worst consumer score of director (where use permitted); insolvency events reported in London, Belfast and Edinburgh Gazettes; lateness of filing of financial statements; poor financial results; recent increase in credit applications tracked through previous searches.

From our investigations we find that there is a distinct similarity in the way that the modern Credit Reference Agencies models work. It follows that most agencies will produce similar results based on information that is not necessarily dedicated to financial or legal data.

Commercial Delphi Scores The Commercial Delphi Score is an analytical tool designed to highlight the strength, performance and ultimately the creditworthiness of a company in a single score. The score itself combines up to 50 different factors including profitability, gearing and size along with other non financial items such as County Court Judgments, payment performance information, lateness of accounts, regional failure analysis and directors' information. The score predicts the likelihood of a company failing in the next twelve months. Experian’s definition of failure includes dissolved companies and insolvency situations such as Liquidator, Administrator and Receiver appointments, Voluntary Arrangements and Petitions to Wind Up.

In Commercial Delphi separate scorecards have been developed for the key sub-populations by segmenting based on number of years of accounts filed and size of company. The aim of the analysis was to build a risk model that embodied the characteristics of previously failed companies. This model is then used to predict the failure of existing companies. A Commercial Delphi score is then assigned which will indicate the degree of risk for each company. The scores are currently banded as follows:

Score 91-100 Very low risk
Score 81-90 Low risk
Score 51-80 Below average risk
Score 26-50 Above average risk
Score 16- 25 High risk
Score 2-15 Maximum Risk
Score = 1 Intention to Dissolve / Winding-up Petition
Score = 0 Failed Company

Consumer Data / Delphi Scores Director’s (consumer) Delphi scorecards were developed to incorporate into the Commercial Delphi score. Scorecards were developed based upon level of CAIS membership, that is: full CAIS, bank level CAIS, default CAIS, and no CAIS. These scorecards utilise the consumer information held on the directors of small, independent companies, where the consumer and commercial finances of the directors are effectively indistinguishable. Each individual director of a company receives a Director’s Delphi score, the worst of which then forms part of the overall Commercial Delphi score. Note: Director’s Delphi score is not used for companies with more than three directors or companies that are not independent (i.e. have a parent) because there is no perceived relationship between directors’ finances and that of the company as a whole. Credit Ratings / Credit Limits Once the Commercial Delphi score has been established a Credit Rating and Credit Limit is then assigned.

The Maximum Credit Rating and Credit Limit that Experian will assign to any limited business is £10 million. For a non-limited business the Maximum Limit is £100,000. The Commercial Delphi Score is a component part of the Credit Limit decision. For each risk band there is a corresponding multiplier that is applied to the credit rating for the purpose of setting credit limits. The multipliers for the 0-100 score bands are as follows:

0 - 15 0.0 x Credit Rating
16 - 25 1.0 x Credit Rating
26 - 50 1.5 x Credit Rating
51 - 80 2.0 x Credit Rating
81 - 90 2.5 x Credit Rating
91- 100 3.0 x Credit Rating

The stage of evolution of the business is also considered when assigning the credit limit to a limited company. For those companies where accounts have been filed, and for non-limited concerns the above multipliers are used. For those limited companies where accounts are yet to be filed a 1:1 correlation is maintained between the credit rating and credit limit. This reflects the different nature of the risk with a new limited company. All limited companies have a separate legal identity from the directors. This means that it is possible that a business can fail but that creditors can have little assets to claim against for any bad debts. This does not apply with non-limited concerns where the liability of the owners is absolute.

0 – 15 0.0 x Credit Rating
16 – 100 1.0 x Credit Rating

As a limited company becomes more established the risk profile changes so that it is possible to speak for higher limits. The addition of the financial data allows Experian to see what reserves have been built up and hence gives the ability to recommend higher limits. Where accounts are filed the credit rating will be derived from a percentage benchmark figure that is referenced against either Turnover or Total Assets. Turnover is the preferred measure for the business as this is perceived as a better indicator of the required trading levels for the business. However as only around 13% of companies currently supply profit and loss statements to Companies House the benchmark is more often referenced against total assets. Total assets is simply the addition of the total fixed and total current assets of the business as stated in the most recent Balance Sheet at Companies House. Experian then used the benchmark derived and the Delphi Score to make a calculation for the credit rating.

The credit rating is intended to be a recommendation for “an average 30 day credit requirement for an average supplier”. The credit limit is intended to be a recommendation for “total exposure to any one supplier at any one time”. The higher the risk profile is the lower the recommended exposure will be.

It is also important to note that Experian rate and score all businesses on a standalone basis. As previously stated all limited companies have an independent legal identity and as it is this identity that our clients will be contracting with Experian have designed Commercial Delphi to make recommendations that are based on the merits of the individual business and not the merits of other legally separate entities. For any business where a financial analysis is not available the credit rating and credit limit will be derived from the risk profile of the individual businesses (and business owners) concerned. Reference is also made to average turnover per employee tables for the appropriate industry. If an industry specific average is not available then an average for all sectors is used. Experian combine the Delphi Score, the number of employees and the average used to extrapolate a turnover figure that is then used as the base for deciding on the level of the credit rating given. Experian have great expertise in modelling such businesses and use this expertise for this purpose. There is also a proven correlation between the way that individuals of small businesses manage their own finances and the way they are likely to handle business finances. For many small business owners these sources of finance are interchangeable and indistinct. The inclusion of the DCM scores (detailed above) in the risk assessment models makes the combination of modelling expertise with the breadth and quality of Experian’s consumer bureau unrivalled. Experian feel that for these businesses “the owner is the business” and that the credit ratings and credit limits calculated accurately reflect the level of contractual risk undertaken.

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What to do when First Report and Experian Delphi Credit Limits are different?

By providing access to both models in our reports clients have the benefit of an assessment based on two methodologies. There is no 'right or wrong' credit limit; only the credit granter can decide what represents an acceptable business risk for their own business as this is not something a credit rating model can reflect. However, if First Report's model has scored conservatively a stronger Delphi score may reflect the fact that the Delphi model has taken into account information beyond the financial status of the company, such as the credit status of the directors and prompt payment histories. Conversely a weak Delphi score where First Report's model has scored more confidently may suggest that the Delphi score is reacting to indicators outside of the accounts which are indicative of increased risk.

It is only possible to know after the event whether a company has proven credit worthy for a given amount. All credit risk models are therefore imperfect, and although they can serve a useful purpose in assisting in the credit granting decision making process, they can only ever be a guide based on probability rather than certainty. The credit granter must consider all the other information presented in the report, and also obtain as much additional information as possible. The credit granter must also make a decision based on what represents an acceptable business risk for their own business as this is not something a credit rating model can reflect: a £10,000 credit exposure may be modest for a large multinational company, but the same amount could be a significant risk for a small business. It may therefore be appropriate for a small business to have a lower risk tolerance than a large business would for the same debtor. It should also be understood that extending credit always carries a risk, and even if the risk can be loosely quantified by a credit score, that risk never-the-less remains. The only credit risk model which would be 100 percent right, would be a model that always predicts a 100 percent failure rate; that is, that all companies could possibly fail. However such a model would be of little benefit to practical credit risk assessment. The balance in any credit model is to offer a reasonable guide to the level of risk, while reducing the number of false alerts against generally sound companies. If a credit model scores a company as low risk, with for example, failure probability of 1 in 100, the fact is that the company may be the one that fails. This highlights another point about interpretation of risk probability. A probability of 1 in 100 does not necessarily mean that the subject company itself has a 1 in 100 chance of failure, but more accurately that out of 100 other companies that are known to have already failed, about one of these would have had a similar profile to the subject company. This is fundamentally how credit risk models operate: they analyse the profiles of known failed companies, identify regularly occurring features, and attempt to quantify the correlation between identified features and subsequent failure. However, not all failed companies will indicate the known warning features, and conversely some companies that exhibit warning features never-the-less continue to trade.

The First Report rating is calculated primarily for trade credit exposures. The First Report rating is accompanied by a written analysis which will explain any factors that have influenced the credit rating.

Both ratings are calculated guidelines. What is more important is for credit controllers to set credit limits that are appropriate for their circumstances and which they are comfortable with.

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The Net Monthly Credit Rating and Maximum Credit Rating explained

Our Limited Company reports may show two credit limits:

  • Net Monthly Credit Rating
  • Maximum Credit Rating

In reports that include a Net Monthly Credit Rating this indicates an appropriate monthly credit limit. The Maximum Credit Rating makes allowance for the fact that not all companies operate on 30 day terms, and that additional credit may be extended while current invoices have been issued for payment.

The Maximum Credit Rating we display will change depending upon the Terms you have entered. For example, if your Terms are 60 days, then if the Net Monthly Credit Rating is £10,000 we would display your Maximum Credit Rating as £20,000.

You can set your standard Terms from the menu by going to My Account and then down to Update Your Details. You can also change your Terms per company either when selecting each report, or from within the report by clicking the link to 'Set/Change Your Credit Terms'. If your business sells on irregular terms and you wish to know the total credit worthiness you may choose to set your default Terms to 90 days.

Non-Limited business reports are always subject to net monthly conditions for the credit limit shown.

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Formulas used for financial ratio analysis

Click here for a Guide to Ratios used in our reports. Click here for a list of industry sectors for which it is possible to get further analysis including industry sector averages.

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Company Valuations

The going concern valuation is based primarily on profitability, and uses EBITDA (earnings before interest, tax, depreciation, and amortization). Adding back interest paid accommodates the scenario where the seller pays off any business loans from the proceeds of the sale and the new business owner makes their own decision on the level of borrowing required to fund the business. Depreciation and Amortization are added back to profits because they are non-cash items. Audited accounts reduce profits by charging depreciation and amortization to the profit and loss account. This is an accounting convention and does not reflect any cash actually leaving the business. However it is worth remembering that depreciating assets do need replacing or adding to during the normal course of business, and in this respect the amount of depreciation and amortization may provide would-be business owners with a notional amount to budget for this cost. Typically a private company will attract a lower value than a public company, all else being equal, simply because the stock of a closely held company is non-marketable. Also for smaller companies the risk is considered greater than for large companies, and investors may seek a slightly higher percentage return on investment. So a lower purchase price may result for the smaller of two otherwise equal companies generating the same level of profits.

The valuations in our service are based solely on accounting data and when no profit and loss data is filed the valuation estimates are further limited by having access to balance sheet data only. Our service does not consider any specific factors or any strategic or commercial considerations which may influence the actual value to either buyer or seller and any consensus on a company's value can only be determined with disclosure of detailed information and a due diligence process. The high value is not a ceiling above which the company might not be expected to be worth. The high value is simply a reasonable expectation of a higher value as opposed to the conservative expectation embodied in the low valuation. Any actual valuation must be based on more detailed investigation and must take account of the specific circumstances and motivation for both buyer and seller. Neither valuation takes account of any strategic or economic value that may result from acquisition. Valuations are not to be treated as an absolute and there may be scope for significant upward or downward revision as circumstances and further information dictate. For example where a buyer has a strategic interest in acquisition the value may be higher, and where due diligence reveals less positive information about the business, then values can quickly fall.

Where the valuation is modest this may reflect inconsistent or modest profits in relation to the suggested valuation price. The level of profitability over latest and previous periods may need to show consistently higher returns on potential investment, i.e. the valuation price, if a higher valuation is to be easily justified. In some cases the valuation will not be much more than the net asset value. This is because a company's assets exist only to make profits. Unless a buyer has strategic interest in particular tangible or intangible assets, then the value of the business is normally limited to its ability to generate cash profits. Even a profitable company may not find a buyer willing to pay in excess of net assets unless the profits are high enough compared to the net assets value. When deciding how much to pay for a business a buyer will calculate the annual net income they can expect to generate. To justify the risk and effort the potential profits need to be sufficiently more than they would get from keeping their cash in a lower risk investment. The profits need to be even higher if the buyer has to cover the cost of borrowing to fund the purchase. If the investment return is not high enough, or the company is making losses, then a buyer may not even pay the net asset value.

Liquidation valuations are usually lower and are asset based. These reflect possible amounts realized if the assets of the company need to be liquidated rapidly. As such many of the assets may be substantially discounted. The liquidation valuations apply typical discounts to various asset classes, and suggest high, mid, and low values accordingly.

Because asset values can be significantly discounted in a rapid disposal scenario, if the net assets of the company are modest in proportion to the amount of debt, any surplus value of net assets over liabilities can quickly disappear. If a company is trading with negative net assets or net worth then it is even less likely to expect sufficient value would be realised in all assets to cover existing liabilities.

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