The most trusted credit bureau in India is the Credit Information Bureau India Limited, or CIBIL, which is responsible for establishing and maintaining the credit history and payment details of individuals and businesses. This information helps the entity to avail loans from banks and other financial lending institutions.
The credit details are stored in the form of a CIBIL Report, or the Credit Report, which is then consolidated into a figure called the CIBIL Score. Understandably, the Credit Report is significant in the process of the loan application and reflects the financial health of the concerned individual or the business.
Subsequently, a healthy Company Credit Report can help in availing business loans for a variety of businesses. This Company Credit Report depicts a company’s credit history, which is a reflection of the financial potential of any business.
In order to understand why a company credit report is essential, we must take a look at the following features entailed by the report.
Each time that the entity’s company credit report is availed from the CIBIL database, an identification figure in the name of report order number is generated and assigned accordingly.
The company details are laid out in the profile of the Company Credit Report. Company name, address, contact details and a unique Data Universal Numbering System (DUNS) number are mentioned in this section.
This section contains the company’s credit history, showcasing the number of loans availed by the company. It also puts forth the many numbers of sources, i.e. the lending institutions, which have extended credit to the company.
A detailed explanation regarding the credit is mentioned in this section of the company credit report. This includes the types of loan/credit, amount of loan, total credit, and the number of enquiries made in the past 24 months by institutions.
This pertains to the details of the shareholding entities, directors, partners, holding company, etc.
The credit facilities provided to the company and the details of individuals and/or businesses that have guaranteed these facilities are mentioned here.
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The information of the credit payment history of businesses is provided by lending institutions like banks, finance companies, non-banking institutions, credit card companies and others. This is fed into the Company Credit Report, which is, in turn, used by the companies/businesses to improve their credit standing and strengthen their finances so as to get business loans approved.
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Companies can check CIBIL Score online every once in a while, to stay updated on their credit rankings. The lending institutions use this data to analyse the credit decisions that must be taken in order to provide the businesses with loans. The following parameters are taken into consideration to evaluate credit-based possibilities for the companies.
The Company Credit Report is used as a parameter by the lending institutions to decide whether the company is capable of handling the debt pressure of the loan it is applying for. This is based on the repayment history of the company. If discrepancies in form late payment and/or defaults are found in the report, the loan application may not be accepted.
The more the different types of collateral mentioned in the company credit report, the better the chances of loan approval. These include, but are not limited to, business inventory, property, equipment, etc.
It’s important to note that lenders pay attention to the kind of capital an owner invests in the company/business.
The balance sheet is inspected by the lending institutions to understand the amount of debt it holds.
A list of the business’goods and raw materials which are up for sale, will be examined by lenders.
The turnover of the accounts receivable with regards to the sales made by the company will be reviewed.
Analysis of the company’s net sales minus the cost of sold goods will be conducted by the lenders.
The company will be reviewed for the amount of its working capital as well.
As witnessed in the aforementioned parameters, the Company Credit Report is a significant proof of a company’s creditworthiness and reflects its financial potential to acquire a business loan.
Individual borrowers, too, should be mindful of their CIBIL score and credit history, as it can affect their borrowing capabilities for personal loans, business loans, vehicle loans and more.It is considered a good practice to regularly monitor your CIBIL score to identify ways to strengthen your credit profile.
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