Your business credit report plays an important role in understanding your company’s creditworthiness. Banks and NBFCs use a commercial credit information report to check whether a particular firm is eligible for a business loan or credit. It has all business-related information regarding past loans, current credit obligations, credit usage ratio, and the number of inquiries made.
This blog will help you to get an understanding of the credit information report, sections of a commercial credit information report, types of business reports, business credit report agencies, the difference between CIBIL score and CIBIL rank, the importance of company credit reports, ways to improve company credit reports, etc. when you apply for a business loan in India.
A commercial credit information report or business credit report is a report of a commercial entity credit history that is prepared for potential commercial borrowers, such as public limited companies and private limited companies. It has a record of the company’s credit history, based on the data submitted by various lending institutions across India. It helps them in making better and quicker lending decisions by analyzing these types of business reports.
TransUnion CIBIL, Experian, CRIF High Mark and Equifax are business credit reporting agencies in India. These reports are used by different banks and NBFCs before offering credit to their customers looking for loans corresponding to their business.
For better understanding we are trying to explain the report prepare by CIBIL. For commercial entities such as public limited companies, private limited companies, partnership firms, and proprietorships there is CIBIL Rank and Company Credit Report (CCR). It helps to determine company’s creditworthiness.
When individuals apply for a loan, lenders pull a CIBIL credit report and it ranges from 300 to 900, where 900 is considered the maximum score. Just like individuals, businesses also apply for a business loan to finance the purchase of new machinery, acquire inventory, or expand the operation, etc., and when they do, lenders pull their commercial credit information report, which ranges from 1-10, where 1 is considered as the best rank.
Generally, a typical Commercial credit information report consists of below details about the business:
It is divided into four different sections.
A Business Credit Report is a financial document which provides information about the company’s financial health. Containing information more than the history of payments, and creditworthiness of the business. It is very similar to a personal credit report but focuses on the company’s financial activities.
A business which is looking for short-term cash flow needs, or a long-term expansion plan can make use of credit reports by CRIF to make precise, quick judgements while making a clear decision about their creditworthiness.
The business credit report contains information about the business, credit history, credit score, trade reference, financial information, business background, and details about the organisation’s credit behaviour.
As a business owner, it is essential to understand your company’s credit score. Businesses have their own credit score like an individual’s credit score, which provides the details about their financial health and creditworthiness.
You can check your business credit score with a few easy steps
Once you get your credit report, there might be some changes that are required to be made to get a perfect credit rank. To get a good credit rank you must work on improving the factors that draw your business back, such as making late payments, having many credits, etc.
Maintaining a good credit history is not as hard as it seems. You can ensure that you are on the right financial track by following the right steps. By following the above-mentioned steps, you can demonstrate yourself as a responsible borrower and improve your credit score. Improving your credit score can take time and it is important to be patient and consistent in your efforts.
You can find many business credit reporting agencies online that offer various tools and products that can help companies to check, monitor, and seek to manage their scores and might give the company credit report in India free.
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