What is a Company Credit Report? A Quick Guide

Similar to individuals, companies also have a credit report that provides the relevant financial background information of a company. It comprises information about ownership, risk score, subsidiary companies, liabilities and bankruptcies.

A credit report can also be generally known as a business credit report as it holds a summary of a business. The business credit score stands from 0 to 100, with 100 representing the maximum. 

What is a Company Credit Report?

In official terms, a company credit report is a comprehensive document holding detailed information on the financial position of a company. Below mentioned are major components of a company credit report:

• Background information on business that helps with the verification of a company’s legitimacy. 
• Company’s risk score, financial data, subsidiaries and liabilities to understand the creditworthiness.
• Uniform commercial code filings
• Summary of banking, trade, and collection history
• Information about liens, bankruptcies and judgments.

This report is usually taken into consideration before two companies partner up or make any deal. Along with the companies, lenders also rely on the company credit report before sanctioning any loan under the company’s name. 

Why is a Company Credit Report Important?

It is important for companies to keep updating their credit report since the lenders and partnering companies use this report to determine the following things about your company:

• Credit worthiness: By providing information about payment patterns, outstanding payments, credit history, this report indicates the credit worthiness of a company. The less outstanding debts, the better it is for a company. 
• Lending terms: if you have a positive credit report, it can be easy for a company to negotiate on favorable interest rates while applying for a loan. The lender keeps an eye on the credit report before negotiating.
• Accessing new opportunities: Before making any transactions or signing for a new deal, partnership or locking a contract, each organization makes sure to check the credit report of your company. You should make sure to give them the best results.

Factors Affecting Your Company Credit Report?

Here is a list of key factors that can affect your company credit report:

• Payment history: It includes all your outstanding payments of credit cards, loans and other credit accounts. Payment history holds a great amount of importance while calculating the credit score, and if you fail to maintain the required score, you may not be able to take loans. 
• Credit utilization ratio: This ratio calculates the amount of credit score used by the company in relation to the entire credit limit. In simple terms, the more you use it, the more credit you have taken, which raises the possibility of a discrepancy in the eyes of the lenders or other companies. It is advised to use 30% of your credit limit. 
• Credit mix and length: If you have various credit accounts such as credit cards and loans, it is a favorable situation for you as it indicates your efficiency in maintaining various credit accounts. As of length, the longer the credit history, the better. Credit length demonstrates your ability to manage credit over a long time period. 
• Other records: This may include bankruptcies, liens and legal judgments that can negatively affect your credit score. Try to maintain a healthy credit profile by avoiding these activities. 

How Can You Download Your Credit Report?

Follow these steps to download your company credit report:

Step 1: Visit the official website of CIBIL, CRIF High Mark, or Experian

Step 2: Click “Get company credit report” to purchase/ download your company credit report.

Step 3: Fill in the asked information such as company name, registered address, GSTIN etc.

Step 4: Make a payment to access the report as indicated on the screen.

Step 5: Upload all the KYC documents for verification such as incorporation certificate, PAN, address proof etc.

Step 6: Once the payment and verification is done, you will be able to see your company credit report over your screen. You can also download the report.

How to Improve Your Company Credit Report?

The credit score for a company credit report ranges between 0-100. The higher your score, the better your score is. Below are a few tips to help you improve your credit score.

• Timely payments: Always make your credit accounts payments at the earliest possible. Having numerous outstanding payments affects your credit score negatively. You can also set up automatic payments to avoid missing any deadlines.
• Consistent trade references: It can build a positive relationship with the vendors and suppliers who report to the credit bureau.
• Aim at low credit utilization: Try to use only 30% of your credit limit and keep your credit utilization low in relation to your overall credit limit. 
• Update information: Keep updating if there is any change in your company address, name, ownership. This demonstrates the company’s credibility towards others.
• Expanding credit limits: Requesting an increased credit limit from your lender and maintaining your spendings can increase your credit score. 
• Lessening credit applications: Try to limit your credit applications as before sanctioning any loan, your new credit applications are inquired. The higher the amount of applications, lesser are the chances of attaining a loan.

By applying the above strategies, you may improve your company’s creditworthiness, take home better financing terms, and strike up new business opportunities.