CIBIL Score for Business Loan

CIBIL Score for Business Loan

18 Jun 2020

The credit rating by TransUnion CIBIL has long been considered the most important and reliable indicator of the creditworthiness of a person. When an individual approaches a bank or any other financial institution, the first question raised by the lender usually pertains to their CIBIL score check.

The CIBIL Score is calculated for individuals based on their credit history, the amounts they have borrowed, how regularly they have made their repayments and what liabilities they continue to have. This CIBIL score allows lenders to make a realistic assumption about the amount the individual will borrow, and whether they can be trusted to make their repayments in a timely manner. 

A high CIBIL score enables individuals to easily avail the best loans in India. The Bajaj Finserv Business Loan of up to Rs. 30 Lakhs, available on Finserv MARKETS, enables entrepreneurs to easily fund their working capital requirements.

Similarly, the TransUnion CIBIL also maintains CIBIL Score for business loans which is calculated on the basis of the Company Credit Report (CCR). Available only for companies which have a current credit exposure of up to Rs. 50 crore, the CIBIL score ranges from 10 to 1, where 1 is the highest rank a company could have. Read on to learn more about the CIBIL score for business loans.

Company Credit Report (CCR)

This elaborate report is compiled with information received from various credit and lending institutions. Lenders further rely on this to assess the creditworthiness of a business before they grant the loan. There are some common components of a CCR:

  • Background Data: This includes information on the company’s parent and subsidiary organisations, ownership as well as its years of ownership.
  • CIBIL Score: The elaborate CCR also mentions the CIBIL Score for business loans as a 1-digit number ranging between 1 to 10. This CIBIL rank is especially helpful when you wish to avail top loans such as the Bajaj Finserv Business Loan, available on Finserv MARKETS, which allows you to avail up to Rs. 30 Lakhs and repay it over a flexible tenure ranging from 12 to 60 months. It can be used for increasing your working capital and meeting any other requirements of your business.
  • Financial Data: The report includes details on the company’s financials, which enable lenders to determine the credit levels that they can comfortably borrow at.
  • Financial History: This section includes details of the company’s financials, in terms of the previous loans they have taken, the frequency of repayment as well as their personal revenue and collections.

Factors Influencing the CCR

TransUnion CIBIL maintains the CCR based on the information shared by lenders, and with the CIBIL score for business loans it computes. Read on to learn more about the factors influencing your CCR and what you can do to ensure your CIBIL score remains high.

  • Credit History Length:

A long credit history enables a higher CIBIL score, especially if you are able to show a history of timely repayment. 

  • Credit Utilisation Ratio:

Credit utilisation ratio depicts the amount of credit a company requires and utilises. The higher the credit utilisation ratio, the less creditworthy a company is considered. This is similar to the credit utilisation ratio judged for individuals.

  • History of Repayment:

Over the course of their operations, companies often avail loans and are required to pay EMIs. When lenders assess the CIBIL Score for business loans, they pay special attention to this part as it allows them to assess how reliable the company’s repayment will be. That is why it is necessary to always repay your loans on time.

  • Outstanding Debts:

It is possible that businesses may already have existing loans while applying for a new one with a different lender. However, the CIBIL score check includes an analysis of the different loans that are outstanding for a business and its capacity to repay them. It is always best to take as few loans as possible in order to ensure that your creditworthiness remains intact.

  • Company History and Size:

How long a company has been operational and its size are huge factors for consideration while computing the CCR and during a CIBIL score check. Companies that have been operational longer usually have higher CIBIL scores since their history is more as compared to newer firms.

The CIBIL score for business loans is an important tool that lenders use while deciding to approve your business loan, which is why it is important to ensure it remains high. With a high CIBIL score, you can easily avail the best loans such as Bajaj Finserv Business Loan, available on Finserv MARKETS. You can get approval within 3 minutes for a range of requirements including your working capital needs. You can repay loans of up to Rs. 30 Lakhs within a flexible repayment tenure of 12 to 60 months.


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