When you converse with somebody about CIBIL scores and reports, as a rule, the photo that develops in their brain will identify with home advances, individual advances, auto advances or charge cards. This is on the grounds that CIBIL scores have turned into a basic piece of any type of credit being stretched out to a person. Nowadays, in the event that you don’t have a decent CIBIL score, you can state farewell to the likelihood of getting any advance affirmed.
While that might be the situation for advances for people, CIBIL isn’t simply intended to judge the financial soundness of people. A little known truth is that CIBIL keeps up credit reports for organizations as well and it is alluded to as Company Credit Report (CCR).
Why organizations require credit reports If you, as an individual, choose to take an individual or a home advance, you require a CIBIL score that tells banks how great you are with reimbursing an advance. In the event that the score is great at that point banks are all the more eager to stretch out advances to you yet in the event that it’s awful then they would prefer not to chance giving you an advance. This is a primary that applies to organizations as well.
Assume you needed to extend your business yet were shy of capital for said extension. Your conspicuous advance is approach a bank and that is the place the organization credit report comes in. Banks will settled on your financial soundness in light of the report they get from CIBIL.
Why is the CCR important?
Much the same as people, organizations likewise have credit reports that are critical to their capacity to approach budgetary establishments for advances. The credit report tells establishments the circumstance of the organization concerning its credit. It has sections that can educate them of the current credit that the organization has, the exceptional sum and regardless of whether any claims have been documented against the organization.
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 CIBIL 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 enquiry 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.
How to improve company credit reports
As with all credit reports, a company’s credit report can also suffer from the negative effects of non-repayment of credit extended. This means that:
- If you have taken a loan in your company’s name then make sure you pay it back in time.
- If your company has issued company credit cards then make sure not to default on the bills.
- Make sure that your credit report is accurate. Sometimes there may be a mistake in the information sent to CIBIL by the bank and this mistake could cost you a loan.
- Don’t take more loans than you can afford to pay back, especially if you already have loans that the company is paying back.
Difference between CIBIL, CRISIL, Fitch Ratings, etc
Many a time’s people confuse CIBIL ratings to be the same as CRISIL or FITCH credit ratings but this is not the case. There are two distinct differences between these ratings and these differences are:
- CIBIL is a credit rating given to an entire company whereas ratings like CRISIL are provided for individual products offered by a company.
- CRISIL ratings inform customers about the health of a particular product whereas CIBIL reports are meant to inform banks of the credit history of the company.
- Companies, just like individuals, need to take loans which require a good credit history. That is why it is absolutely essential for companies to maintain good company credit reports.