Commercial Cibil Report

A commercial CIBIL report is used by lenders to assess a company before providing any credit. Company CIBIL score is important to get facilities like business loans or overdraft when you need capital for your company. Read on to know more about what is a good commercial CIBIL score range and how to maintain it.

What is the Commercial Cibil Report?

Credit rating agencies develop a credit report for individuals each year based on their credit behaviour. Similarly, commercial establishments are also rated on the basis of their repayments towards loans and other parameters to create a Commercial CIBIL Report. 

This is a detailed record of the credit history of the commercial establishment, based on information provided by lending institutions. For individuals, a credit score between 300 and 900 is calculated based on the information in their credit report. On the other hand, for companies, a credit rank or commercial CIBIL score between 1-10 is provided to assess their creditworthiness. 

Section of Commercial Cibil Score

The commercial CIBIL score range is based on various parameters or sections in the credit report. The main sections in a commercial CIBIL report are: 

  • Identification: This is a standard ID that is present at the top of the CIBIL report. Each company gets a unique Report Order Number. CIBIL score rating agencies use this to know how often this report has been viewed.
  • Enquiry Information: Here, the details of the company, including the address and an ID, are provided.
  • Borrower profile: The borrower profile contains four more sections:
  • Borrower Details: This includes the legal constitution of the company, the registered name, the nature of business etc.
  • Contact details and address: This includes the phone number, registered office address and other details.
  • ID details: This contains the PAN number, registration number and other unique IDs
  • Delinquencies: This provides the payment status of the organization and its guarantors.
  • CIBIL Rank: This is the company CIBIL score, which lies within the range of 1-10. A CIBIL score check gives the lender an idea about the financial health of the company.
  • Enquiry Summary: This is the section that provides the list of all lenders who have made enquiries about the company recently.
  • Derogatory Information: Any default, dishonoured check or overdue are listed in this section.
  • Outstanding balance: The classification of the company’s assets is provided based on the credit facilities that they have availed.
  • Location details: This is the section of the CIBIL report that provides any additional information about the company.
  • Related entities and parties: This section provides details of the proprietor, partner or any other entity associated with the company.
  • Credit facility as a borrower: The details of all the credit facilities that the company has availed are provided here. This includes the payment status, type of credit facility, overdue and other details.
  • Credit facility as a guarantor: The details of any credit facilities that the company has guaranteed are provided here.
  • A suit filed: In case any legal disputes have occurred with previous lenders, the details are mentioned here.
  • Credit rating summary: The latest information about the company, as assessed by credit rating companies, is listed here.
  • Enquiries made over the last 24 months: All the enquiries made for a credit application for the company are listed in this section.

Additional Reading: What is CRIF cibil score?

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Why is the Cibil Commercial Report Important?

It is very important to know how to read CIBIL report and also carry out regular checks on the Commercial CIBIL score. This is the primary document that lenders refer to in order to assess the creditworthiness of a commercial entity. 

Borrowers have a minimum CIBIL score cut off for any credit facility that they provide to their customers. Only if the company has a rating higher than this will it be eligible to avail of these facilities. 

The maximum CIBIL score for a company is 10. The closer the company is to this number, the higher the chances of getting a loan or credit facility. 

Factors Affecting Commercial Cibil Report

What is CIBIL score affected by? If you understand the factors that affect your CIBIL score, then you can manage your credit behaviour accordingly. For company CIBIL score, there are six primary factors that you need to consider: 

  • Repayment History: This is the most important piece of information that is used to create the company CIBIL report. It shows how the organization manages any dues and credit. If the organization has been punctual with making repayments, then it is likely to have a good CIBIL score range
     
  • The ratio of Credit Utilization: Organizations get various credit facilities, including overdrafts, loans and credit cards. How this credit is used determines the financial health of the company. In case the company has a very high credit utilization ratio, it shows poor financial health and may also indicate that the organization is credit hungry. This impacts the commercial CIBIL score negatively. 
     
  • Credit Age: This is the duration for which the company has availed credit facilities and made repayments towards them. The more the credit age, the better it is for the credit rating of the company. It shows that the organization has ample experience managing credit facilities. 
     
  • Current Outstanding Debt: The types of loans that the company has availed and the outstanding on these loans affect the CIBIL score. If the company has too many loans, it indicates low repayment capacity. As a result, it reflects negatively on the company credit report. 
     
  • Size and Age of the Organization: When a company has been in business for a long time and is a larger entity, the chances of approval on credit facilities are higher. These organizations are usually considered creditworthy because of the large scale of operation and the growth of the organization.
     
  • Profit and Turnover: This factor directly affects the repayment capacity of any company. When you have higher turnover and profits, it is easier for you to get more loans or credit facilities.

Additional Reading: How to increase cibil score fast?

How to Check Company Credit Report

There are two options for you to check CIBIL score of your company: 

Directly through Credit Rating Agencies: 

  • Log on to the official website of a credit rating agency like CIBIL. 
  • You can get commercial CIBIL report free once a year on these websites. 
  • Find the link on the website that directs you to the free annual commercial CIBIL report. 
  • Open an account for your company by providing necessary details like your PAN number, GST number etc. You will be prompted through the registration process.
  • Once you have registered, you will receive the credit report on your email ID. 
  • CIBIL score rating agencies also give you the option of subscribing to their services, depending upon how many times you wish to check your CIBIL report each year. 

Through third party websites and applications 

Fintech companies have developed CIBIL score calculator for individuals and companies to check CIBIL score by PAN card and other basic information: 

  • Open the CIBIL score calculator on the website or mobile application. 
  • Provide the necessary details as prompted by the application. 
  • Check free CIBIL score and even get a detailed report on the registered email ID.

How to improve your CIBIL rank in a company credit report?

Once you check free CIBIL score, you may notice that you need to make several changes in the way your organization functions to build your credit score. Usually, improving your CIBIL rank takes up to 6 months. But, the earlier you start, the faster you are likely to reach a good credit score range: 

  • Make repayments on time: Regular repayments towards any credit facility helps you maintain a good credit score. It is best to make your payments before the due dates in order to have the maximum CIBIL score for your company. 
     
  • Avoid too many credit facilities: A credit hungry organization is always considered a low-risk borrower by lending companies. Make sure that you use credit facilities only when you need them. Having multiple credit facilities like loans or overdrafts shows that your company does not have adequate revenue. It also reduces your repayment capacity subsequently, making it harder for you to get a loan in the future. 
     
  • You need credit to build credit: The credit age determines the organization’s ability to manage credit. It is necessary to have some credit and make regular repayments towards them in order to build your credit score. Start with small OD accounts and business loans that are affordable for your company. 
     
  • Improve your revenue: The profit of your company directly affects your repayment ability. So, work towards improving revenue sources and maintain your profit and loss statements accurately in order to become more creditworthy. 
     
  • Do not make multiple credit enquiries: This is true for individuals as well as companies. When you make too many enquiries within a short time frame, it shows that the organization is financially stressed. If you have any rejected applications, it deteriorates your credit score even more. 
     
  • Avoid high credit utilization: The credit utilization ratio plays an important role in your commercial CIBIL report. Even if your organization is eligible for overdrafts or loans, avoid utilizing them entirely. Company credit cards must be used carefully to ensure that you do not use the entire limit available to you. Using 30% of the limit on ODs or credit cards is advisable to maintain a good credit score. You have to check cibil score for credit card before applying.
     
  • Fix issues in your credit report: The credit report is developed based on the information provided to the credit rating agencies by lenders. This data is shared with the agencies every 30-45 days. Sometimes, however, there may be some inaccuracies or incomplete information that may affect your credit score. Getting these issues rectified is the easiest way to improve your credit score quickly.  

The guarantors of the organization also play an important role in the credit score of the organization. It is important for all individuals and entities associated with the organization to maintain a good credit score to improve the chances of getting necessary credit.

Additional Reading: What is Equifax credit score?

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FAQs

✅How many types of CIBIL reports are available?

There are two types of CIBIL reports that are generated by credit rating agencies. One is an individual CIBIL report, and the other one is the commercial CIBIL report which is used to determine the credit behaviour of an organization. 

✅What is CMR in commercial cibil?

CMR stands for CIBIL MSME Rank. This is a rating between 1 and 10, where 1 is considered low risk and 10 is considered high risk. The CMR is a value used to predict the chances of default by Small and Medium Enterprises. Through various parameters, the CMR determines how likely an organization is to default over the following year. 

✅Which is the best CIBIL report?

The best CIBIL report is one that shows regular repayments towards credit, has a mixed credit profile and shows good turnover and profit. The best CIBIL score a company can get is 10. So the closer you are to this value, the better it is for your organization. 

✅What are the four credit bureaus?

Currently, there are four credit rating agencies in India, namely TransUnion CIBIL, Experian, CRIF High Mark and Equifax. 

✅What is the meaning of 1 in credit bureau score?

1 is the lowest credit score that a commercial entity can get. This means that the company has defaulted on various loans in the past and is not a creditworthy borrower. 

✅How can I print my CIBIL report?

When you request your CIBIL report from a credit agency, you can provide your email ID as well. The CIBIL report is sent to the registered ID, where it can be downloaded and printed as necessary.