Ever wondered why your business credit report plays such a big role in determining your creditworthiness for lenders? Just like every individual has a personal credit score, every business also has a credit score. Your business credit report or Commercial Credit Report (CCR) is based on information provided by many lending institutions across India and is a record of your company’s credit history. It acts as an indicator of your company’s future credit activity and financial health, and understanding the different parts of CCR is the first step to improving it!
Why is a CCR Important?
Your CCR plays a key role in getting your business approved for a business loan, as lenders assess the report before approving your business loan application. The report reflects the credit history and historical financial behaviour of your organization and is, therefore, an indication of its creditworthiness. Having a good credit report helps you qualify for a business credit card, secured and unsecured business loan, term loan or machinery loan – all of which can help your business to grow.
Here is a sample Experian CCR, so you can see exactly the type of things lenders look at when they are assessing your business loan application.
What information does a CCR contain?
We put together a cheat sheet to help you interpret your report! Typically, your CCR contains the following information about your business:
Background Details
The first segment of a CCR contains background information about your business. The details include the parent company, subsidiaries, ownership details, year of establishment, etc.
Credit Score
Experian is one credit bureau that operates in India. Experian India offers a score that ranges from 300-900 and follows the guidelines specified by the Reserve Bank of India (RBI) to calculate your credit score. For an Experian report, a score of 750 and above is considered a good score and indicates that you have a good track record of repaying previous business loans on time.
Financial Details
This section provides information on your business’ current financial position. It helps a lender decide on the business loan amount they should offer you given your company’s repayment capacity.
Payment History
Before a lender decides to offer you a business loan, they will check to see if you have been making your EMI payments on time to other lenders so far. It also provides lenders with information like whether your business is acting as a guarantor for any other loans and the status of those loans.
Previous Searches
The past searches section refers to details of inquiries requested by all lenders on your business’ credit report/score in the last 24 months. It reveals how many times your company has applied for credit over the specified period. A high number of past searches indicates that your business may not be in the best health and may reflect negatively on your ability to repay previous debt received.
Every time you apply for a business loan and are rejected by a lender, it is recorded in this section. This negatively impacts your credit score and further reduces the chances of having your application approved.
However, when you apply for a business loan with CreditEnable, we only do a soft credit pull of your report. This means we are able to assess your credit score and, therefore, your creditworthiness without negatively impacting your score. Through our 100% digital and free application process, we get your business loan requirements in front of over 20 lenders within minutes! We eliminate the time spent on researching and comparing business loan products, and then going from one bank to another to apply for each loan separately, only to receive multiple rejections! With just one application that only takes 2 minutes to complete, we can tell you whether you meet any of our lender partners’ business loan eligibility upfront! We save you time, stress, and best of all, there is no negative impact on your credit score!
Now that you know a bit more about what goes into a Commercial Credit Report, you could request your own CCR to understand how your business is assessed from a lender’s perspective and work towards improving your report. When you request your own credit report, it is also considered a soft pull, which does not impact your credit score. This function allows you to know your credit standing and take corrective measures to improve your credit score, if needed, before submitting that business loan application to ensure it is approved!
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