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Importance of Credit Information for Companies
Over the past few weeks, we learned the importance of maintaining a healthy credit history and its impact on your ability to borrow. This applies to companies too, including Private and Public Limited firms, Partnerships, Trusts, HUFs and Self Help Groups and others.
We maintain the credit information of these entities as submitted to us by our member banks and financial institutions. The credit products included are cash credit, overdraft facilities, loans of all maturities, bank guarantees, letters of credit, deferred payment obligations, forward contracts and any other debt exposure companies incur. This information is used to create a Company Credit Report (CCR)- a month-on-month record of a company’s debt related exposure and payments.
Benefits of using a CCR
The advantages of accessing your company’s Credit Report are manifold:
- While applying for a loan: Whether a large listed company or a SME, we will have your company’s credit records if your company has raised loans from a bank or financial institution. Your CCR is then used to evaluate your company’s creditworthiness whenever you apply for a loan or additional credit lines. Accessing your CCR helps you ensure its accuracy and a better understanding of your financial standing.
- While building reputational collateral with business partners: Your CCR acts as an indicator of your company’s financial strength and helps negotiate better credit terms while doing business. Partners and vendors see a demonstrated ability to regularly service loan obligations as an indicator of your financial strength.
- While re-evaluating existing trade credit practices: Ask your business partners to build reputational collateral by sharing their CCR with you, which will give you an understanding of their creditworthiness and help you to periodically re-evaluate the credit terms you provide.
Understanding your CCR
To check your company’s credit health, access your CCR for only Rs. 3000/- from here. You will need to complete the online request form and upload your company’s KYC details. The CCR contains the following details:
- Credit facility details: This section contains details of the credit facilities availed by your company and the repayment pattern.
- Guarantor and Credit facilities guaranteed details: This section contains details of the credit facility and the details of the business entity/ individual that has guaranteed the particular credit facility (if any) availed by your company.
- Enquiry details: This section contains details of all the enquiries, i.e., the number of times your company’s credit information has been requested by members (banks and financial institutions) from CIBIL over a period of the last 2 years.
- Suit filed account(s) of the borrower: This section contains details of any suit filed against your company. Review your CCR and ensure that it is accurate so that your business does not face a liquidity crunch at an inopportune time.