A credit score is so much more than just a number. It’s what stands between the business owner and the business loan product for him. A good credit score is a key to qualifying for a business loan and receiving favorable rates of interest. All loan lenders check the credit or CIBIL score of the borrower before deciding to grant him a loan.
The major credit rating agencies in India are CRISIL, ICRA Limited, CARE, and BWR. They track the personal credit to evaluate credit score. The score is evaluated on the basis of credit history, payment towards loan, loan payment defaults, and criminal history as well. Although the scores may vary between them, a good credit score means the business owner will have a good score from all agencies. In India, 700 or more is considered a good score to qualify for a loan for business.
Let’s take a look at the benefits of CIBIL score of 700.
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Qualify for Instant Business Loan
Business owners often find themselves in a situation where they urgently need funding. Notably, a business can witness a growth opportunity at any time. But applying and qualifying for a loan is a tough task that takes a lot of time. However, if the credibility is proven, the lenders don’t need to track the record. Without a history of good or bad credit management, lenders would take a long time in assessing the eligibility of the borrower. Thus, a credit score of 700 can benefit in terms of an instant business loan.
Get Lower Interest Rates
The reason why a lender checks the credibility is that he ascertain that the borrower would be able to repay the loan. That the borrower is credible enough to grant a loan. And when a high CIBIL score confirms the credibility of the borrower, the borrower is at a lower risk. Consequently, he is ready to offer business loans, even at lower interest rates.
Higher Limits on Credit Card
Many business owners also use a business credit card to purchase items for the business. Business credit cards have higher credit limits than other consumer cards. Different banks offer credit cards for business. But they would offer cards with a higher limit only to those entrepreneurs who have a 700+ credit score. It is worth mentioning that the business credit cards come with higher interest rates as compared to business loans.
A good score offers the lender to choose from a variety of business financing. He can avail the services at lower rates and with more favourable payment terms and conditions. And now that you also know the top 3 benefits of a high credit or CIBIL score, you can work towards improving CIBIL score if it is below 700.
