When you talk to someone about CIBIL scores and reports, more often than not, the picture that builds up in their mind will relate to home loans, personal loans, car loans or credit cards. This is because CIBIL scores have become an integral part of any form of credit being extended to an individual. These days, if you don’t have a good CIBIL score, you can say goodbye to the possibility of getting any loan approved.
While that may be the case for loans for individuals, CIBIL is not just meant to judge the creditworthiness of individuals. A little known fact is that CIBIL maintains credit reports for companies too and it is referred to as Company Credit Report (CCR).
Why companies need credit reports If you, as an individual, decide to take a personal or a home loan, you need a CIBIL score that tells banks how good you are with repaying a loan. If the score is good then banks are more willing to extend loans to you but if it’s bad then they don’t want to risk giving you a loan. This is a principal that applies to companies too.
Suppose you wanted to expand your business but were short of capital for said expansion. Your obvious step would be to approach a bank and that is where the company credit report comes in. Banks will decided on your creditworthiness based on the report they get from CIBIL.
Why is the CCR important?
Just like individuals, companies also have credit reports that are key to their ability to approach financial institutions for loans. The credit report tells institutions the situation of the company with regards to its credit. It has segments that can inform them of the existing credit that the company has, the outstanding amount and even if any lawsuits have been filed against the company.
Needless to say, a good report equals approval of loans whereas a bad report will damage a company’s chances of being considered for a loan.
Components of the CIBIL Company Credit Report
If you own a business, you can ask for the Company Credit Report and see where you stand. If you do get the report, here is what you can expect to see in it.
This is the very first part of the report and gives details of the current report that deal with when it was generated, by whom, as a self-inquiry or enquiry by an institution. It also has a unique number associated with it which is generated every time your report is asked for.
The profile section is the second part of the report and contains all the details related to the company to which the report relates. It contains basic information like the company’s name, address and contact details. It also contains a unique number, assigned to each company, called the DUNS number (if it is shown as 99-999-9999 then a DUNS number has not been assigned to your company yet).
This is the part of the report that actually talks about the credit history. It lists the number of loans that the company has taken. It also lists the balance of the credit extended to the company and the number of sources that have extended said credit. If the company has acted as a guarantor for a loan then that too is mentioned in this section.
Credit type and enquiry summary
This is the section where the credit extended to a company is explained in more detail. It is split into the types of credit, overdraft, loans, etc. and the amount of each credit is also mentioned with the total credit mentioned at the bottom.
How to improve company credit reports
As with all credit reports, a company’s credit report can also suffer from the negative effects of non-repayment of credit extended. This means that:
- If you have taken a loan in your company’s name then make sure you pay it back in time.
- If your company has issued company credit cards then make sure not to default on the bills.
- Make sure that your credit report is accurate. Sometimes there may be a mistake in the information sent to CIBIL by the bank and this mistake could cost you a loan.
- Don’t take more loans than you can afford to pay back, especially if you already have loans that the company is paying back.
Difference between CIBIL, CRISIL, Fitch Ratings, etc
Many a time’s people confuse CIBIL ratings to be the same as CRISIL or FITCH credit ratings but this is not the case. There are two distinct differences between these ratings and these differences are:
- CIBIL is a credit rating given to an entire company whereas ratings like CRISIL are provided for individual products offered by a company.
- CRISIL ratings inform customers about the health of a particular product whereas CIBIL reports are meant to inform banks of the credit history of the company.
- Companies, just like individuals, need to take loans which require a good credit history. That is why it is absolutely essential for companies to maintain good company credit reports.
FAQs Regarding CCRQ. Do companies also have credit reports?
Yes, just like individuals, companies also have credit reports that details their credit histories.Q. Why do companies need credit reports?
When companies approach banks and financial institutions for commercial loans, they too require a good credit history to be eligible to take said loan. This is why they need credit reports.Q. How are they different from individual credit reports?
The credit report of a company is not about an individual within the company but the company as a whole, whereas, an individual’s credit report is about their personal finances.Q. What is DUNS number?
The DUNS number a unique number assigned to each company to track its credit history.Q. My companies DUNS number is shown as 99-999-9999. What does this mean?
If your DUNS number is shown as 99-999-9999 then it means that a proper number has not yet been assigned to your company and one will be assigned in the near future.Q. Does a “write off” affect my CIBIL report?
There are very few things worse for your credit rating than a loan against your name that’s been “written off”. Banks and lenders only write off loans when they are unable to locate the defaulter or the defaulter has flat out denied repayment. A write off basically means a loan that was never recovered, and lenders will almost never lend to a person who has a loan written off against his or her name.