Everything You Need to Know About CIBIL Rank

If you ever think of applying for a business loan, irrespective of the amount, the financial institute or the Bank would provide you with a timeline of a few days. During this time, the lender will assess your creditworthiness and comprehend whether you are eligible for a loan.

The decision is based on a few factors, like your past credit history, loan amount on your company’s name, and more. This worthiness is quantified on the Basis of your CIBIL rank.

Let's know what is CIBIL rank and how it can affect your business loan approvals.

About CIBIL

Abbreviated for the Credit Information Bureau (India) Limited, CIBIL is a place where the information regarding your credit is gathered and stored. It is one of the RBI-registered Credit Bureaus in India and has been listed under Securities and Exchange Board of India (SEBI).

What is a CIBIL Rank?

A CIBIL rank is meant to summarize your Company Credit Report (CCR) and is in a numerical expression. Although similar to the CIBIL Score, the rank is provided at a scale of 1 to 10, where 1 is considered as the best rank.

Unlike the CIBIL score, the rank is only for businesses that have got a credit exposure between Rs. 10 lakhs to Rs. 50 crores. Primarily, a CIBIL rank depicts the chances of missing on payments by your company, which is a key Factor of evaluation by lenders while approving a loan application.

The significant parameters that are assessed while calculating the CIBIL rank are the credit utilization and past behaviour of re-payment.

What is CIBIL CCR?

It is a record of the credit history of your company. The CCR is generated on the basis of data submitted to CIBIL by finance authorities across the country. The behaviour of payments in the past, by your company, can strongly impact the future action.

A typical CCR report comprises the following information:

1. Background Information

The report usually begins by stating the background information of the business, like subsidiary and parent companies, years of operation, ownership, and more.

2. CIBIL Rank

The report then mentions the CIBIL rank of the company, ranging from 1-10.

3. Financial Information

The report includes additional financial details that determine the adequate credit levels that lenders can allow you to borrow.

4. Financial History

The report also covers a brief of financial history, such as collections, repayments, revenue generation, etc.

Accessing CCR and CIBIL Rank

CIBIL members are allowed to access the information from CIBIL. The list includes leading financial institutions as well as banks. However, to access the information, members would have to provide their data to CIBIL so as to gain permission.

How can you Enhance Company Credit Report and CIBIL Rank?

To improve both of these aspects, you would first have to comprehend the factors that can impact your rank and CCR. Below are some points that can help you enhance the overall ranking of your company:

• The loan taken by you should be in the name of your company. However, make sure that you don’t Default any payment.
• Pay EMIs of your credit card’s outstanding debt on time.
• Stay cautious of every transaction going from your or the company’s card so that the mistakes, if arising, could be rectified on time.
• Don’t exhaust your Credit Limit and take a loan only when you can pay back.
• Taking long-term debts and paying on time can reflect positively on your rank.

Conclusion

When you start a business, seeking a loan is not a bad thing. However, when you miss your EMIs and start defaulting your re-payments, things become difficult for your company’s future. Hence, it is recommended to pay on time to have a good CIBIL rank.