Big ticket purchases - Why I use a credit report first

I have been scouring the internet over the past few weeks looking for reasonable prices for a new car. As well as getting advice about how to haggle and negotiate for the bargain price, I thought I would also check out eBay to see what people were asking for nearly new cars in my price range as well, considering that we all know how a car depreciates the minute they are driven from the forecourt.

I was surprised to find that quite a lot of cars in my price range on eBay were being sold by motor dealers. Even more surprising was that these were smaller independent used car dealers within 5 miles of my house that I had never even heard of. I thought about whether, if I had come across these businesses whilst driving around, I would have been happy to part with £15k plus of my hard earned cash just because they offered a car that took my fancy. Even if I could then come home and check on the internet, maybe find them on eBay and check out their feedback - would this give me the confidence to enter into any sort of dialogue with them about purchasing a car?

I've worked in the credit and information industry for some time and the experience I've garnered would mean that I would probably be automatically undertaking quite a lot of investigation into any business I was thinking about paying for a product or service. This may not be the case if I had decided to shop at my local Ford or Vauxhall dealership but a smaller business that I have no previous knowledge of?
Rogue traders are always in the newspapers and on consumer tv programmes where individuals have lost significant amounts of money when purchasing from less than reputable businesses who subsequently run off with their money without doing a days work on one's new kitchen or deliver that new product as per the signed agreement. There is also the possibility that the company is close to going bust and the minute the money has changed hands, it all goes up in smoke. But it doesn't have to be that way.

Company credit reports can be large, complex documents but they are available to individuals as well as other businesses and they offer a lot of information that can help safeguard your money.

When buying your credit report, make sure you've got enough information to make an informed decision:

• Confirm the business’ identity – Look at their name, their registered office and trading addresses. Ensure that they are genuine and everything matches with what you already know of them
• Are they an established business? – If they are local, can you satisfy yourself that you can remember them trading in your area for some time or do any of your friends and neighbours have experience of them. How long have they been around for?
• Are they financially viable? – Reading profit and loss accounts and balance sheets may not be your forte but most credit reports will give quite a clear indication if the business looks a bit risky or is likely to go bust taking your money with it
• Look at their financial record – Even with the cleanest financial accounts, is there any other information that gives an indication of cash flow issues. County court judgments, insolvency notices, petitions to wind up the business etc are all signs that the business currently is struggling to pay its creditors
• Look at their personnel record – The directors of the company should be listed on a limited company credit report and proprietors or partners listed for other types of companies. Check who else these people are currently or previously associated with as poor track records can follow a person from business to business.


So, before you think about spending serious money in a business or personal situation, think about investing just a little bit on buying a credit report first. I know I will...