What is the Minimum CIBIL Score for Business Loans?

• Collateral requirements: If you lack collateral or want to apply for an unsecured Business Loan, having a good credit score makes you eligible to get the funds you need.

• Loan terms: Your chances of approval, competitive rates, repayment tenure and other loan terms can be negotiated if you have a higher credit score.

How to Improve Your CIBIL Score for Business Loan?

Now that you know the importance of having a higher CIBIL score for a Business Loan. You should learn ways to improve your score. To be eligible for a Business Loan with favourable terms, follow the steps below.

• Pay Your Dues on Time: When you fail to pay the dues on time, you may face challenges in maintaining a good credit history and improving your CIBIL score. If you have an ongoing loan, make the repayment in time. Don’t forget the due dates for credit card bills to make timely payments. You can increase your creditworthiness by adhering to all financial obligations.

• Regularly Review Your Credit Reports: Reviewing your credit score is essential to improve your creditworthiness. If an activity negatively impacts your credit score, you can promptly address the issue and maintain a healthy score. Improve your eligibility by checking your credit reports once every three months.

• Avoid Frequent Loan/Credit Card Applications: Multiple applications within a short period can raise concerns for lenders. Whenever you apply for a loan, it reflects a hard inquiry on your credit report, which eventually lowers your score. Rather than applying frequently, you should assess your financial needs, compare loan options, and apply only when necessary.

• Maintain Low Credit Utilisation: The Credit Utilisation Ratio is the percentage of available credit you use. Try to keep it below 30%. Higher utilisation indicates your dependency on credit. Hence, keeping your credit utilisation low demonstrates you can manage the debt. It is advised to monitor and manage the credit balances regularly to keep the utilisation ratio low.

• Have a Good Mix of Secured/Unsecured Loans: Diversify your credit portfolio and include both types of loans to demonstrate your ability to manage different financial liabilities. Secured loans, such as home loans or vehicle loans, show that you are eligible for asset management, while unsecured loans, like Business Loans, reflect that you make repayments in a disciplined manner. This balance improves your creditworthiness and improves your credit score.

Conclusion

Obtaining an instant Business Loan without a CIBIL score is challenging. While traditional loan providers strictly consider your CIBIL score, new-age lending institutions can offer small or younger businesses alternative financing options. Though CIBIL reports are essential, there are factors beyond the CIBIL score, such as business revenue, cash flow, and business performance. Consider applying for unsecured Business Loans from Hero FinCorp and get the funds necessary for your business growth. Remember to review the terms and conditions carefully to make an informed decision.

FAQ

What is a poor business credit score?

Poor or low credit score results from late payments or higher credit utilisation. An unfavourable or poor credit score falls under the range of 700.

How to get a Business Loan with no credit score?

Getting a Business Loan with no credit score is challenging. You can get a secured loan by providing your property as collateral and using the funds for any business purpose.