10 Tips to Improve and Maintain Your MSME Credit Score

Maintaining a healthy MSME credit score is essential for securing a Business Loan at competitive interest rates. A strong score not only boosts your chances of loan approval but also strengthens your MSME’s financial reputation. Read on to know 10 tips to improve and maintain your MSME credit score. 

10 Actionable Tips to Improve and Maintain Your MSME Credit Score

Here are the top 10 tips for you to follow:

1. Pay Dues on Time

Whether it is a previous MSME loan, utility bills, or credit card EMIs, timely payments are crucial. Delays or defaults are among the top reasons for a declining credit score.

Tip: Automate payments to avoid missing deadlines.

2. Limit Credit Utilisation

High credit usage may indicate financial stress. Ideally, use no more than 30-40% of your sanctioned credit limit to maintain a healthy score.

Example: For a ₹10 Lakh working capital limit, try to keep usage under ₹4 Lakh.

3. Check Your CIBIL Score

Periodically check your CIBIL score to track progress and spot discrepancies. Errors in your credit report can drag your score down.

Actions to be taken: Raise a dispute immediately if you find any incorrect data.

4. Avoid Multiple Loan Applications

Each Business Loan inquiry generates a hard credit pull, which can lower your score. Apply only when you are ready and avoid approaching too many lenders at once.

5. Maintain a Healthy Credit Mix

A balanced portfolio of secured and unsecured loans (e.g. machinery loan + working capital loan) helps build a strong credit profile.

Tip: Avoid relying only on unsecured credit or short-term borrowings.

6. Prepay or Close Old Debts

Clear old and high-interest loans if your cash flow permits. Lower outstanding debt improves your credit utilisation ratio and boosts your MSME credit score.

7. Keep Personal and Business Credit Separate

Using personal credit cards for business expenses can impact both your personal and MSME credit scores. Apply for a dedicated Business Loan or overdraft facility instead.

8. File GST and Tax Returns Timely

Lenders consider tax compliance as a measure of financial discipline. Timely filings also help when underwriting a future MSME loan.

9. Strengthen Relationships

A positive and long-term relationship with your lender can aid faster loan approvals and better terms, especially if you maintain a clean repayment track record.

10. Get Your MSME Registered with Credit Bureaus

Make sure your MSME is registered with bureaus like CIBIL or CRIF. This ensures your repayment history is recorded and reflected in your credit score.

Why MSME Credit Score Matters

Whether you are applying for an MSME loan or a general Business Loan, your credit score is a key evaluation factor. A score above 750 improves your chances of loan approval and reduces your borrowing cost.

How to Check Your Business Credit Score

Knowing your MSME credit score is the first step to improving it. You can easily check your CIBIL score for business online through the official CIBIL website. Here’s how to do it:

1. Visit the CIBIL website – Go to the website and select the Company Credit Report (CCR) option.
2. Fill in your business details – Enter your company name, PAN, and company registration proof.
3. Pay the fee – A small fee may be cha for the report.
4. Receive your report – Once verified, your MSME credit report and score will be shared with you via email or on the portal.

To Conclude

Improving your MSME credit score is about consistency and financial discipline. Make smart borrowing decisions, check your CIBIL score often, and repay on time. Over time, these habits will strengthen your financial credibility and unlock better loan opportunities.

Frequently Asked Questions

1. What is a good CIBIL score for MSME loans?

An MSME credit score of 750 or above is considered ideal for loan approvals.

2. How often should I check my CIBIL score?

Check it once every 3 months or before applying for any new credit.

3. Will applying for multiple MSME loans affect my credit score?

Yes, multiple hard inquiries within a short time may reduce your credit score due to frequent hard pulls.