How to Maintain Your Business CIBIL Score Above 700

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5 min 02 Feb 2023

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Tips to Maintain a Business CIBIL Score Above 700
Importance of Maintaining a Business CIBIL Score Above 700

700 as a credit score is considered a good number on the most common credit score range, which is between from 300 to 900 where 850 is considered as the maximum achievement. If you already have a score that is 700 and above, you are already following good financial practices. The most important credit bureau in India, namely CIBIL generates a Credit Information Report (CIR) and issues the appropriate credit score, also known as CIBIL score to anyone seeking credit, be it companies or individuals. CRIF Highmark, Experian and Equifax are the other credit bureaus that provide valid CIRs and credit scores you can check.

Smart Tips to Maintain a Business CIBIL Score Above 700

A business credit score cannot change overnight, but some alterations in one’s financial habits can consistently and gradually make a positive difference. The details below will guide you in enhancing and maintaining a business CIBIL score above the requisite mark of 700:

1.Repay Credit Dues

One of the ideal ways to build a business credit score is through regular and timely payment of bills and credit dues. So, pay your EMIs or credit bills before the due date. Clear the outstanding amount on the credit card bills in full each time. If you pay only the minimum sum, the interest and taxes add up in the next billing cycle creating a bigger debt.

2.Limit Credit Utilisation

Whenever you avail of credit, restrict your credit usage within the available limit. Usually, the credit utilisation ratio is pegged at 30%. Anything in excess will hurt your business credit score. Hence, if your company’s expenses demand it, try to opt for a higher credit limit so that your credit rating is not hampered.

3.Avoid Multiple Loans

Applying for multiple loans at a time can affect your score so curtail the number of loan applications. It is also advisable to close existing loans before availing a new one. Similarly, having numerous credit cards and using them for making high-value purchases can be counterproductive if you cannot foot the bills on time.

4.Check Your Credit Report

Your credit report may contain errors or incorrect information, or there could be a delay in updating details that can adversely impact your business CIBIL score. Therefore, check your firm’s credit report periodically and if you spot any mistakes, get them rectified to improve the score. You can easily check your CIBIL score by visiting the official website of any credit bureau or through credible third-party websites that offer access to credit scores.

5.Get a Mixed Credit Portfolio

Organisations should include different types of credit in their portfolio. A mixed bag of secured and unsecured loans of both long and short tenors can boost their credit history. At the same time, they must also retain older credit accounts with a good repayment record to enhance their creditworthiness.

Also Read: What is Credit Mix and How Can it Improve Your Credit Score?

Is it Important to Maintain a Business CIBIL Score Above 700?

Lenders normally consider a minimum business credit score of 700 and above while granting loan approvals to companies. They classify potential loan borrowers according to their credit score extending risk-based pricing on certain loans. Thus, companies with a high CIBIL score pose minimal lending risks and can secure larger loans at attractive rates of interest.

Further, business owners can leverage their impeccable credit and personal profile for more favourable loan terms. A good CIBIL score proves to lenders that the company owners are credible customers who can manage loans in a responsible manner.

On the other hand, a score below 700 should be a cause for concern. In all likelihood, your company could be tendered loans at higher interest rates with a shorter repayment tenor. You may be given stricter loans terms, which can make your overall loan costlier. In some instances, your firm might even find it difficult to secure any kind of credit.

Maintaining a business CIBIL score above 700 is critical for the well-being of a company. Both new and established businesses need to take urgent action if their score isn’t up to the mark. This is an ongoing task that requires smart planning and financial discipline. So, monitor your business credit report, the different lines of credit and spending patterns; and always ensure timely repayment of debts. Within six months to a year, your business credit score will experience a steady climb.

Also Read: Ways You Can Improve Your Credit Score for a Small Business

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