The Benefits of Having a Good Business Credit Score

It is an established fact that banks and financial lenders look at your personal credit score before extending a home loan or issuing a credit card to you. But did you know that credit scores apply to businesses as well? Well, just like individuals, businesses are also entities that buy, sell, require loans and hence, can be assigned credit scores too. The score for businesses is called Business Credit Score. This score is a determination of the company’s creditworthiness or the likelihood to pay back loans.  Similar to a personal credit report, a business credit report gives a snapshot of various credit facilities availed by the business and repayment history on each of these facilities to the bank. Business Credit Score is calculated on various parameters such as profits of the business, turnover of the business, financial activities of the business and many such details of the business that determines the credibility.

Benefits of having a good business credit score

1. You will receive a better loan term

Businesses have many options to obtain financing including banks and other financial lenders. You qualify for a business loan when you are one of the following:

•         Private Limited or Limited Company
•          Partnership or Proprietorship Company
•         Chartered Accountant
•       Self Employed Professional

When you have a good personal credit score, you are most eligible to receive loans easily and even at a lower interest rate. The same applies to a business credit score. In India, the business credit score varies from 300 to 900. When your business credit score is more than 700, lenders find it safe enough to lend you a loan. 

2. You can conveniently secure the capital required for your business expansion

As a company expands, it may require the purchase of additional equipment or capital to cater to the growing expenses. While applying for a loan, one of the factors considered by the lender would be the business credit score and credit history. Of course, there are other factors that as well such as business revenue, assets & liabilities, profits, the collateral value of the equipment that the company seeks to purchase with the loan proceeds, and so on. With a good business score, you will be able to secure a hassle-free loan for your business.

3. Protects your personal credit score

Banks do not stop at merely a business credit score check. They also insist on checking the lendee’s personal credit score. By checking personal credit report, the lender gets to know how diligent the key decision-maker of the business is in managing his or her personal finances and how much loan outstanding the decision-maker holds in personal capacity. If you have a good business credit score, your personal credit score won’t hold much weight, thereby, relieving the burden off your shoulders.

How to check your business credit score?

CRIF High Mark is a business credit bureau providing a credit score for your business. You can get your CRIF business credit report and Score in just 3 simple steps:

1. Fill in your Business Details such as name of the business, PAN, address, name of authorized signatory, PAN of authorized signatory
2. Secure pay for your report
3. Upload your documents such as a scanned copy of PAN, Address proof, etc.

Your report will be sent to you within 7 working days upon successful verification of the shared documents.