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What is a Company Credit Report? Research Team | Posted On Tuesday, June 18,2019, 02:40 PM

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What is a Company Credit Report?



The company credit score is a numeric representation of the credit history of a company which helps businesses easily avail bank loans and trade credit from various financial institutions. The company credit report (CRR) is generally compiled by various business credit rating agencies like Experian, Equifax, FICO and Dun & Bradstreet. CRR is also known as the business credit score, applicable to all kinds of business entities like a private limited company, public limited company, partnership firms and proprietorship businesses.

The CRR contains the company background information (parent and subsidiary companies, ownership, years of operation), CIBIL rank, financial information and financial history.

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What is a Company Credit Report?

What Does a Company Credit Report Entail?

Outlined below are the salient features of a company credit report:

  • Order Number: A company credit report consists of the order number. It is the number generated each time a user accesses the company’s credit report through the CIBIL database.
  • Profile Section: The company credit report has the profile section which includes details like name of the company, class of activity and DUNS number.
  • Report Summary: The company credit report contains a report summary of the number of credit institutions that have sanctioned loans to the company.
  • Credit Type and Enquiry Summary: This consists of details like types of loans availed and the number of credit enquiries made in the past 2 years by various banks and credit institutions.
  • Relationship Details: This refers to a section in the company credit report that consists of the relationship details of the directors or partners of the company.
  • Guarantor Details: This section consists of the details of individuals or businesses who serve as guarantors for the credit availed by the organization.
  • Credit Facility Details: Refers to the loans and credit availed by the enterprise.
  • Enquiry Details: This section consists of the number of times the company credit report has been sought by the credit institution.

See Also: Credit Score India

Evaluation Parameters:

The company credit report is a summary of the repayment history of an organisation or a company. The information in the credit report is based on the credit information passed on by the banks, housing finance companies, NBFCs and credit card companies to the credit information bureaus.

A company seeking a business loan from banks and credit institutions must have a good company credit report (CRR). The credit institutions evaluate the borrower on certain important parameters like CRR, repayment capacity, gross profit and so on.

The credit institutions use the CRR to make informed and effective lending decisions by evaluating the following parameters:

  • Repayment Capacity: Banks and credit institutions use the CRR to evaluate the creditworthiness of the borrower. The CRR helps go through the repayment record of the company and analyze if the borrower is able to repay the dues. A good credit report and a sound repayment history help the company get good deals on loans. However, a bad CRR may lead to rejection of the business loan application.
  • Collateral: A business loan is likely to get approval if the loan is backed by collateral or security like any asset or equipment owned by the company.
  • Capital: Lenders also take into consideration the amount of investment made by the owner of the company. The total amount invested is a significant eligibility criterion for company business loans.
  • Leverage: lenders analyse the total debt owed by the company before sanctioning loans.
  • Inventory: The lenders evaluate the company’s inventory which consists of the finished goods accumulated by the company, before selling to the end users.
  • Receivables Turnover: The credit institutions analyze the accounts receivables with respect to sales.
  • Gross Profit Margin: Gross profit margin is calculated by subtracting the net sales from the cost of sold goods.
  • Liquidity: Lenders consider the company’s working capital as an important factor before sanctioning credit.
  • Turnover: A company’s turnover is the value of company sales over a set period of time. Lenders review the annual sales of the organisation while granting loans.

See Also: What Is Credit Score?

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