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.
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.
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:
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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.
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:
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There are two options for you to check CIBIL score of your company:
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:
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.
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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.
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.
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.
Currently, there are four credit rating agencies in India, namely TransUnion CIBIL, Experian, CRIF High Mark and Equifax.
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.
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.