Commercial Credit Report of Private Limited company

Bad credit can keep you from buying a home, financing your education, and even getting a job. This is why it's so important to build good credit.

Why Company Credit Report

Company credit reports indicate their ability to approach financial institutions for loans. The credit report tells institutions the situation of the company with regards to its credit. It has segments that can inform them of the existing credit that the company has, the outstanding amount and even if any lawsuits have been filed against the company.

Needless to say, a good report equals approval of loans whereas a bad report will damage a company’s chances of being considered for a loan.

Components of the Company Credit Report

If you own a business, you can ask for the Company Credit Report and see where you stand. If you do get the report, here is what you can expect to see in it.

Identification

This is the very first part of the report and gives details of the current report that deal with when it was generated, by whom, as a self-inquiry or inquiry by an institution. It also has a unique number associated with it which is generated every time your report is asked for.

Profile

The profile section is the second part of the report and contains all the details related to the company to which the report relates. It contains basic information like the company’s name, address and contact details. It also contains a unique number, assigned to each company, called the DUNS number (if it is shown as 99-999-9999 then a DUNS number has not been assigned to your company yet).

Report Summary

This is the part of the report that actually talks about the credit history. It lists the number of loans that the company has taken. It also lists the balance of the credit extended to the company and the number of sources that have extended said credit. If the company has acted as a guarantor for a loan then that too is mentioned in this section.

Credit type and enquiry summary

This is the section where the credit extended to a company is explained in more detail. It is split into the types of credit, overdraft, loans, etc. and the amount of each credit is also mentioned with the total credit mentioned at the bottom.

What are the factors influencing a Company Credit Report?

The CCR for your company is prepared by CIBIL after having a good look at your company traits and financial history. Here are a few factors that impact your company’s CCR:

1- Length of Credit History – Similar to an individual’s credit report, a CCR is also influenced by the length of credit history. Longer the credit history, better it is for your Company Credit Report.

2- Credit Utilization Ratio – CCR of a company works in a manner similar to that of an individual’s. A higher utilization of available credit portrays a company as credit hungry and hence it is considered less creditworthy.

3- Repayment History – Companies also have to avail several loans to keep their operations running and have to pay EMIs. Timely payment of outstanding amount is always good- whether it is a company or an individual.

4- Outstanding Debts – The amount of debts outstanding with different credit institutions is taken into account by CIBIL while preparing your CCR. Hence, it is important to maintain keep only feasible amounts outstanding.

5- Size and Life of the Company – Older firms are likely to have better scores on their CCR as compared to start-ups. The reason behind this is that the companies operating for a longer time with continuous growth ought to be more credible as compared to the ones that are smaller and newer.

6- Industry – Sometimes, the industry related risks might also have a negative impact on your CCR. For example, real estate is a high-risk industry because of the frequent ups and downs, so the companies that are a part of the real estate industry might be considered less creditworthy than others. Obviously, other factors also count at the time of assigning a CIBIL Rank.

Also Read: How to BuildGood Credit for Proprietorship Company

Recommended credit score

1. It is recommended  for companies to have scored more than 749 for speedy approval of loans 

2. However irrespective of the score , the lending companies also see the full repayment period of the previous loans to get a fair picture of company repayment habits.

Commercial cibil has all details of all types of loans availed by companies that are loan type, amount , year availed, co-applicant, guarantor, repayment status month-wise, etc.

How to improve your Credit Score Rank and Company Credit Report?

For improving your CIBIL Rank and CCR, you need to understand the factors that impact it as mentioned in detail above. In a nutshell, you need to keep the following points in mind to maintain a good financial track record for your company:

• You must have taken loans in the name of your company. Taking a loan is not bad, defaulting on its payment is. So make sure to pay back all your debts in time and get rewarded with a better Credit Rank.
• A number of companies make use of company credit cards. If you are using one, make sure to pay the EMIs on time as an outstanding debt can have negative impacts on your credit  Rank could come down.
• Sometimes, banks and credit institutions can also make a mistake while reporting your company’s transactions. Keep a close watch on each and every transaction and if there is any mistake, get it rectified to avoid repercussions in future.
• Do not exhaust your entire credit limit. Only take loans that you think you can pay back in time. Maintaining a good balance of incoming and outgoing is always good for a company.
• Taking loans for a long term and paying them on time is better as it creates a good image of the company in front of the credit institutions.

Best way to find credit score

The best way to find a detailed company credit report is to get the following credit managing firm website and get a detailed commercial credit report by paying required fee.