When you establish a medium-sized or small-sized business and register yourself for the employee identification number or EIN, your business credit initiates. You will realize that lenders you contact for financial support will check this business credit to gain information on your creditworthiness to consider lending you capital. It is essential to keep an eye on your business credit report to get the right lenders for your business and gain the benefits of flexible terms and several other reasons.
If you are a small or medium business, here are the top reasons why you need to care about your business credit report-
Reason #1- To Prevent Fraudulent Activities:
Many businesses do not update their credit reports and keep using their old ones even though it is a crucial document when you apply for a loan. To keep fraudulent activities at bay, check your latest credit report history for applications you do not recognize, accounts unrelated to you, or any inaccurate information about your business. If you see anything, not in place, inform the credit bureau immediately about the dispute.
Reason #2- To Gain Access to New Credits and Monitor the Health of Your Business:
The business credit score represents the financial health of your business. Most financial lending institutes and banks use your business credit score to understand your repayment options and the viability of your business. If you have an outstanding business credit score, you can get better loan opportunities with the terms and conditions. It will also help get financial support at a lower interest rate. Keeping a check on your commercial CIBIL report can help you evaluate if your loan application will get approved or not.
Reason #3- To Safeguard Your Assets:
When you apply for a new loan but do not have a good credit report for business, the financial institutions may ask you to submit your assets as collateral. This situation is unfavorable as you may lose your personal property set as collateral if your business does not work out and fails to return the loan amount. You may often find this case in newly established businesses that have not yet achieved their good credits from the bureau but need financial help. Always checking your business credit report will allow you to identify faults and errors and credit risk probabilities and resolve them before they worsen.
Reason #4- To Speed Up the Borrowing Procedure:
Normally getting a loan application approved can take time, especially for new small and medium businesses. A good business credit score will accelerate the process since you will have creditworthiness in front of the lenders.
Reason #5- To Ask for a Higher Loan Amount:
Businesses rely on seamless cash flow to keep their operations working. If you find defaulters in your borrowers, you may bring things back on track by a small amount. But if you are setting up a new unit or buying a production space, you will need a significantly larger capital. A healthy credit report for businesses will present you as a responsible borrower, allowing you to ask for a larger sum from your lender.
Reason #6- To Choose the Lender and Tenor:
Businesses with low credit scores do not get many options from their lenders. But if you have a substantial company credit report, you can choose the lender according to your preferences. You will also get the ability to extend the tenor period to repay the loan amount at your pace and maintain your good credit score without disturbing it.
About CreditQ:
Want to improve your business credit score and get a good company credit report for your establishment? Check out CreditQ! CreditQ is a Business Credit Management and Information Platform that helps businesses with a valid GSTIN struggling with business defaulters by managing business credit and defaulters and providing credit information reports of companies based on market business transactions. Visit our website, call us at +91 7240000901, or email us for more information about our services.
