1 min read
25 May 2021

Understanding a CIBIL score

Credit Information Bureau (India) Limited or CIBIL is a first-of-its-kind credit information company in India that collects and maintains credit records of individuals and commercial entities. CIBIL helps financial institutions manage their business better and determines the creditworthiness of an individual or a business. It gets information every month from its associate partners, including members of banks and credit institutions. Based on this, CIBIL prepares a credit information report or CIR. It also provides a CIBIL credit score, a three-digit numeric summary of your entire credit history. The CIBIL score ranges from 300 to 900, and a score above 700 is considered good.

How will it affect my business?

Your company's CIBIL score is calculated based on the credit behaviour listed in your CIR's accounts and ‘Enquiries’ sections. If your business maintains a good CIBIL score, you will be able to enjoy several benefits when you apply for loans or credit cards. Some of these benefits include:

Quick and simplified loan procedures

Your CIBIL score determines whether or not a lender clears your loan application. With an excellent credit score, you will face minimal challenges in getting a loan. This is because the lender has confidence in your ability to repay, based on your record. You will have access to the loan capital sooner, which means you can instantly carry out business transactions dependent on the loan.

Additional read: How to check your CIBIL score

Bajaj Finserv offers one of the best business loans in the market. Their business loan provides excellent flexibility, a nominal interest rate and a long tenor, and you can apply for it online.

To get a higher loan amount and lower interest

Having a good credit score reflects positively on you. It indicates to lenders that you can repay the amount you borrow on time. Because of this, you are more likely to get a positive response from lending institutions when you apply for a big loan. You can get a high loan amount and use your sound credit history to negotiate the interest rate. Although you can get approvals for some loans even with an average credit score, the amount that you get will not be as high.

Additional read: How to improve your credit score

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