Credit is the lifeline of a business, irrespective of its size. Like retail customers, proprietorships and business entities also need a good credit history to get the financial support they need. That is when their company CIBIL report becomes important. It proves an enterprise's creditworthiness, similar to what a credit report does to an individual borrower. Learn more about credit score, how to check, its importance, its components, factors affecting it, and tips to improve it in the following sections.
What is a Company CIBIL Report?
Company CIBIL report is a record of all financial and credit activities that a business owner undertakes. It contains information about all loans and credit lines the firm has taken in the past and present, the number of credit enquiries, credit utilization ratio, etc. It is one of the first and most crucial documents lenders assess to evaluate Business Loan applications. They analyze these reports to determine the applicant's creditworthiness and decide whether to approve or reject the application.
What is a CIBIL Rank?
While an individual CIBIL score ranges from 300 to 900, company CIBIL rank ranges from 1 to 10. After evaluating the company’s financial health, the credit bureau assigns a CIBIL rank between 1 and 10. The lower the number, the better. That means the highest rank is 1, and the lowest is 10. The bureau assigns a CIBIL rank only if the outstanding credit balance is from Rs 10 Lakh to Rs 50 Crore.
How to Get Your CIBIL Company Credit Report (CCR)?
Want to know how to check a company CIBIL score and get your company CIBIL report? These are the steps to follow:
Log in to the official CIBIL website.
Fill out an online form with details like your name and address, company name and address, contact details, the firm’s PAN card details, and some company-related information.
Make the required payment, after which you will receive a transaction ID and registration ID via email.
Share your KYC documents.
After completing these steps, CIBIL will deliver your company CIBIL report and rank within a few days.
Also Read: How to Check Your Current CIBIL Score by PAN Card Number?
What are the Components of a Company Credit Report?
A company CIBIL report contains the following details that help lenders evaluate creditworthiness and determine loan eligibility, interest rates, and loan terms:
Profile
The profile section contains information like the company name, address, and contact details. It also contains a unique identification number, the DUNS number, which CIBIL assigns to the company.
Identification
The identification section contains details like the source, method, time of credit report generation and a number unique to the report.
Credit Type and Enquiry
The section contains details like the type of accounts active in the company's name, outstanding amounts, and the total credit limit available for the establishment. The lender may also find recent credit enquiries in this section, which they analyze to determine the company’s credit utilization ratio.
Report Summary
The section is a summary of the company’s overall credit profile. This part of the company CIBIL report contains information regarding the outstanding debt, number of active loans, financing sources, etc. The section also gives information if the company has been a guarantor for an individual or Business Loan.
What are the Benefits of a Business Credit Health Check?
Every business needs extra funding to sail through tough times, survive the competition, or expand operations. Therefore, checking the company CIBIL regularly has several benefits, including the following:
It lets you know your chances of getting a Business Loan when needed from a financial institution.
Regular business credit health check helps you identify the areas where you need to improve, such as repayment habits, outstanding balances, credit utilization ratio, etc.
Regular checkups help spot any mistakes and irregularities in the report, so you can report them to the bureau and rectify them in time.
In short, regular business credit health checks help you keep tabs on your enterprise’s financial health and take appropriate steps to improve it.
Factors That Affect the Credit Rating of Your Company
These are a few factors that affect a company’s credit rating:
Length of Credit History: The longer the credit history, the better the chances of building a good credit rating.
Credit Utilization Ratio: The percentage of available credit the firm uses is the credit utilization ratio. A credit utilization ratio of up to 40% is an ideal CUR for a good credit rating.
Repayment History: Always pay loan EMIs and credit card bills on time to secure a higher credit rating.
Outstanding Debts: The total amount yet to pay is a crucial factor affecting the firm’s credit rating.
Age of the Company: A business running for several years while honoring its credit obligations builds a good credit rating over time.
How to Improve Your Company Credit Report?
Learn how to check company CIBIL score, know where it stands, and follow these tips to improve the report:
Repay all business credit card bills and loan EMIs on time.
Maintain a credit utilization ratio of less than 40%
Retain old business credit cards to showcase a long credit history.
Improve the business finances and profitability.
Check the company CIBIL report frequently and get any errors rectified immediately.
Conclusion
Company CIBIL report is an essential record of a firm’s financial and credit activities. Therefore, before applying for a Business Loan, check the company CIBIL score and take steps to improve it. Use a Business Loan interest rate calculator to check your interest rate and improve your credit score to reduce it.
FAQ:
What is a company credit balance?
A company credit balance is the amount a company owes to the customers, lenders, partners, or other parties involved in the business.
What is the company credit period?
The company credit period is the duration the company has to repay the credit balance.
What is company credit loss?
Company credit loss is the amount a lender owes to a company owner, but the borrower fails to repay.
