‘Good or Bad – A credit score is influential’
Scoring a decent name, if not fame, is in majority of minds. From yesteryears till date and beyond, everybody longs and wants to snatch good credit. For businesses, the credit-building process takes more time and there isn’t always a single judgement day. Throughout the year, a profitable business, that speaks for itself, is what all ambitious entrepreneurs yearn for. So, what is the yardstick used by banks and financing institutions, against which businesses are measured? The CIBIL score for businesses, Company Credit Ratio (CCR), as it is called, is a significant factor in determining if you are worthy of credit. Read on to find out more….
CIBIL Score For Business & What It Means
Almost all loan-eligible individuals would have definitely taken an effort to know his/her CIBIL score. Why? Better the score, more easier and certain of availing loans. Impose the same policy to businesses. For lenders to determine if their borrower (business) is efficient in loan repayment & understand the nature of his earlier transactions, a CIBIL score for businesses does it. Company Credit Report (CCR) is the acid test deciding how financially healthy your business is. Based on this good or bad score of yours, loan/credit card eligibility, financing, and steady cash flow are at stake.
Factors Influencing Your CCR
Managing a good credit score is foremost on the minds of small business owners . Take a note of the following factors that influence your CCR :
- Multiple Credit Card Applications calls for more creditors running a credit check on you. Apply if and only if you are in desperate need of one.
- Unnecessary/Many Loan Applications in a short duration has a bad impact on your business credit score. Space them out in a prudent manner.
- Delayed Payment Of Credit Card Balances can be wisely avoided by transferring balances to cards with low interest rates. Try to pay your dues, at least more than minimum, to maintain a decent CCR
- Payment Obligations include paying your vendors, your monthly bills and loans too. On-time payment of all these are sure to earn you a good CCR.
- Business Profile means structure, size and reputation of business, cash flow, outstanding debts, net worth. Even your past financial relationships, corporate finance reports are considered for a CCR.
- A Mix Of Personal And Business Credit Score has a negative effect on one another when either of the score isn’t decent. So always keep them distinct and opt for corporation business structures (LLC’s for small businesses). Create a business that is legally separate from the owners.
How A CCR affects you
The key benefits that a good CCR brings along :
- Attracts opportunities/financiers
- Easier funding
- Better chances for business credit / OD / CC and other loan approvals
- Qualify for the best interest rates
- Lower finance charges on credit card balances & loans
- Easier approval on huge loans
- Stay ahead of your competitors
- Lastly, reduced stress
How To Apply For A Business CIBIL Score
Follow these simple steps to complete your process of getting a CCR
- Visit https://www.cibil.com/online/Company-credit-report.do and fill the CIBIL company credit report request form
- On completion of the form, you will be directed to the payment gateway to make a registration payment of Rs 3000/-
- After successful payment, you will be mailed a unique CIBIL registration ID & a Transaction ID
- Login using these credentials in the portal and upload your necessary KYC documents
- After verification of the above, your CCR will be generated by the CIBIL website.
Creating a business from scratch is tough, maintaining a healthy CIBIL score is tougher. Entrepreneurs have to constantly lookout for factors that pull down the credit score. Before nailing down on any vendors/signing up as a vendor for other businesses, question yourself if it would bag you a good company credit score. Never trade your CCR for any big opportunity. Hold a decent score and you are sure to close much bigger deals.
At Relativity, we manage all your payroll, accounting, taxation and compliance needs with utmost accuracy and timely delivery. Reach us on [email protected] or call us on 0-93611-41436 to learn more about our solutions to Small & Medium Enterprises.