Freight brokers serve as middlemen between shippers and truckers. But as with any haul, you must ensure that the broker you’re partnering with has a good financial standing. To do this, you should know how to check freight brokers’ credit scores – shielding you from non-payments that will put a strain on your fleet’s finances.
So how can you do it? In this post, we will discuss how to perform a freight broker credit check and how you can get it for free. Read on to ensure that your next haul will not end up as a financial disaster!
How to check a broker’s credit score
To perform a freight broker credit check, you can do any of these steps (#4 is the most convenient):
1. Use third-party credit bureaus
If you prefer to do the credit check on your own, your first resort would be third-party credit bureaus like Experian or Equifax. These credit bureaus are considered institutions in financial data, and they can give you an accurate credit score for the freight broker you’re working with.
Aside from giving you a number, credit bureaus can also provide a detailed report of the freight broker’s debts and credit history. This way, you can see how many payments they have missed in the past.
While credit checks with these bureaus are free, access isn’t as instant as visiting any website. They often grant access to credit grantors, collection agencies, insurance companies, or employers. In that case, you may need to request access yourself and comply with their requirements.
2. Inquire directly to your broker
Whether you’ve accessed a report from credit bureaus or not, it also pays to ask the broker directly about their financial references. They can even generate the report for you and provide references with other carriers they work with.
This way, you can cross-check their relationship with other truckers and whether they pay on time.
At the same time, ask your broker how they plan to pay you. Take your time in asking questions, so you can assess the broker’s experience, especially if they are offering long-haul and high-paying loads.
3. Network with your fellow truckers
You can join online communities and forums with truckers within your route. This way, you can ask around if someone has experience working with a specific broker and how well they pay. Through this, you’ll have a word-of-mouth recommendation or advice from fellow truckers.
You should also search the freight broker to see if they have an online presence. Most of the time, experienced brokers can be found on Better Business Bureau, where they are rated by previous clients.
Aside from that, look for the broker’s Google and Yelp reviews to establish their credibility. Take note that if a broker barely has any ‘digital footprint’, you should consider looking for another option. This is often a sign that the brokerage is either untrustworthy or notorious for non-payment.
4. Partner with a freight factoring company
If you don’t have time to do any of the three steps we mentioned above, then the best solution is to partner with a trucking factoring company like Factoring Express.
As part of factoring freight invoices, we conduct a thorough credit score check among brokers and shippers. This way, we can ensure that the broker on the invoice has a good payment history – protecting you and us from possible financial troubles.
With our credit checks, you can avoid accepting future loads from high-risk brokers. This will give you more confidence to hit the road while preventing any financial liabilities on your end.
Aside from credit checks, we can also fund your freight invoices within 24 hours. This way, you no longer have to chase brokers for payments, allowing you to accept more hauls while we handle the collections.
Our factoring service is 100% flexible – you can choose which invoice to factor and when. We don’t impose minimums or long-term contracts, so rest assured that you’ll get funding that suits your freight business.
What is a good credit score for a freight broker?
When you check broker credit scores, you should also have an idea about the ideal range you’re looking for.
Overall, a freight broker with a credit score of 69 or below is considered high risk. This means that they don’t have a solid reputation for fulfilling their financial obligations to clients. It’s possible that the broker failed to pay carriers on time or that a new company is still building its financial history.
If you’re dealing with a new company, a low credit score would be understandable as they need time to rake up their scores. It’s important to check their reviews and ensure that they are bonded in case you’re truly bent on partnering with them.
On the other hand, a freight brokerage credit score of 70 to 86 is considered medium-risk. The broker probably failed to pay a customer on time, but on very rare occasions.
In terms of low-risk freight brokers, you’re looking at a minimum credit score of 87 to 100 – the higher, the better. This number shows that they have a solid payment history and have never or barely missed any financial obligation.
Why it’s important to check a freight broker’s credit score
Knowing a freight broker’s credit score is more than just about building trust and confidence in their business. It also has practical applications, including the following:
- It protects you from non-payments. The main benefit of credit score checks is ensuring that the broker can pay you after you deliver the haul. Overall, accepting loads from brokers without checking their credit history puts your business in a compromising situation. And if the broker isn’t insured, you’re bound to suffer from great financial losses.
- It prevents recourse actions when factoring invoices. If you’re selling a freight invoice to a factoring company like us, credit checks will ensure that the broker can pay the total amount. This way, you won’t face recourse actions where you’d have to pay the advanced amount back to us.
- It helps create a solid partnership. When working with a broker, you’re surely planning for a long-term partnership. In this case, having a broker with a good credit score ensures continuity of business without any financial issues.
- It gives brokers more negotiating power. Freight brokers with high credit scores have more power to negotiate better rates with shippers. This will ultimately benefit your trucking business in the long run.
Do you want a free freight broker credit check?
If you want a hassle-free way to check your broker’s credit score, you simply have to reach out to us at Factoring Express! When you factor your invoice with us, we’ll provide free credit checks on every shipper or broker on your invoice – no need to go through credit bureaus on your own.
We will provide you with a full credit report on your broker and advise you about which one has a good paying history. This way, you can protect your revenue and ensure you’re getting good hauls every single time.
If you’re interested in free credit checks, sign up with our factoring for trucking company today! You can also call us for any questions or inquiries about our services!
