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Importance Of Cibil Score For Your Business Loan

When you are applying for a business loan in chennai, you should have a general understanding of “What is CIBIL score?”. The answer to this question is confusing at times for most of the individuals. It is better to know about the following to have a clear understanding of what is CIBIL score check.

Company credit score

The financial status of the company is represented using the company’s credit score. It is calculated based on the information obtained from the reports given by other financial institutions. This score is considered a part of the company’s credit report. In other words, the company’s credit score helps in determining the creditworthiness of the business as well as the company.

Information present in Company Credit Report (CCR)

The information present in Company Credit Report are as follows

  • The background details of the company such as the ownership details and the like
  • Company’s credit score
  • The current financial status of the company
  • Transaction statement

How to evaluate CCR?

CCR may be evaluated based on the

  • Company’s ability to repay the loan
  • Collateral if any as a means of security
  • Capital investment for the business growth
  • Factor determining how long the firm has been in the business industry

CIBIL score

CIBIL is the acronym for Credit Information Bureau India Limited. CIBIL score indicates the credit information of a company. It varies for each person or company based on their credit history. CIBIL score range addresses the following questions

  • Total number of loans availed
  • History about the repayment details
  • Credit history length
  • Whether the payments are made accurate or not
  • Payment record and the like

Why is CIBIL score necessary?

The CIBIL score check indicates if the applicant is capable of making payment on time. This can be assured with the help of credit history which indicates the creditworthiness of the company. the CIBIL score of the person or the company should lie between 300 to 900. Your loan will be approved easily when the credit history is high. In case if you are looking for unsecured business loan, then the credit score should be as high as above 700. In case of secured business loan, the credit score should be between 600 to 700. Credit score is valid only for a single person. In case if the business is run by two or more persons, then in addition to credit score, Company Credit Report and CIBIL rank is essential.

Difference between CIBIL CCR and CIBIL rank

CIBIL score records the credit history of the individual whereas CIBIL CCR records the credit history of the company. The summary of company’s credit report presented in the form of single number is called CIBIL rank. The CIBIL score range is from 10 to 1. The chances of loan getting sanctioned is high when the CIBIL score range lies between 4 to 1. When this value is greater than 4 then the chances of loan getting sanctioned is very less.

How to evaluate one’s CIBIL score?

One can check the CIBIL score range in the respective official website. If you want to generate your CIBIL report then do the following

  • Create an account using username, password and email id
  • Verify your identity
  • Enter the OTP once it is received

How to maintain a good CIBIL score?

There are certain factors that affects the CIBIL score such as the following

  • Outstanding balances if any
  • Credit score for both secured and unsecured loan
  • Number and types of loans applied
  • Credit history

The credit score is also affected by

  • Any delay in payments done
  • Failure to maintain the credit mix
  • Availing multiple credit facilities at the same time

As applying for a business loan in chennai itself is considered a tedious task, it is essential to maintain a good CIBIL score to make this process simpler which helps in satisfying the financial needs of the individual as well as the company applying for business loan in chennai.