What is CIBIL Company Rank? How do I get one?

In order to manage the ever-rising NPAs(nonperforming assets), TransUnion CIBIL has launched CIBIL MSME Rank (CMR) on 28th February 2017. The ranking system will assess the credit risk of the MSME companies. It uses machine learning and data algorithms to predict the probability of default in next 12 months. In this post, we will discuss in detail what is CIBIL Company Rank? and How do I get one for my company, in case you run a company.

The ranking system provides rank on the scale of 1 to 10 based on the credit history of the company. Where scale 1 being the least risky and 10 being the riskiest company. The higher the CMR rank higher the risk of NPA. The ranking will be done for the company which has a credit exposure ranging from 10 lakhs to 10 crores. For the ranking purpose, credit history of past 24 months will be taken into consideration to derive

Currently, MSME is falling into highest risk bracket which has an outstanding of Rs. 54799 crore and maximum defaults are happening from this bracket. It has reached a whopping 10% as of March 2017. On the other side, banks and credit institutes are keen in the sector due to which the credit lending had increased by 11% last year. TransUnion CIBIL will support the credit growth in the MSME sector by giving a tool to banks and credit institutes for 2.1 million MSMEs.

What is the CIBIL Rank?

The CIBIL Rank is a summary of your company’s credit rating (CCR) in the form of one number. It is similar to the individual credit score provided by CIBIL. The ranking will be done on the scale of 1 to 10 where 1 is the highest rank that can be achieved by the company. It only evaluates the company that has credit exposure of Rs. 10 lakhs to Rs. 10 crores. It predicts the future of the company on the likelihood of making a default on loan repayment, which is one of the key factors for any bank or credit institutes.

The CCR is the record of your company’s credit history submitted by banks and credit institutes across India. The past payment trend is the key indicator of its future repayment behavior. It is therefore important to understand the CCR is relied on by loan providers to evaluate and approve the loan application.

The Evaluation Process

The ranking process will be done on the below 4 parameters.

  • Capacity – Company’s ability to repay the loan.

Banks and credit institutes will use the CIBIL credit report – CCR for credit information of the company. They will use these details as an input parameter to evaluate the loan application of the company. In this parameters, the bank will evaluate the company’s current and future income, its cash flow, net profit, capital reserves etc. to ascertain that the company can bear the additional loan burden or not. The lender also checks the past repayment records to determine if it has made any defaults or not. This is one of the key parameters any lender would check before granting a loan application. The loan application will be outright rejected if the lender found any late payment, defaults, or any suits filed by the lender.

  • Collateral – Security against the loan.

The lender will ask for any collateral against the loan. This collateral can be property, inventory, accounts receivables, equipment and other tangible assets. Getting loan approval will be much easier when the application is supported by the higher number of collateral. Risk of the lender will be cover or minimize when the collateral is given by the company.

  • Capital – Owner’s stake in the business.

The lender will check the owner’s stake in the company for which the loan application is received. The owner has to have a significant investment in the business before applying for a loan. This shows the owner’s commitment towards the business. The higher capital stake will help you to get the loan approval easily and faster.

  • Key Financial Ratios – The Financial health of the company.

It is imperative to check the financials of the company to conclude on the financial health of the company before sanctioning a loan.

The lender will check the various financial report of the company like Inventory, Sales turnover, Accounts receivable, gross profit margin, liquidity and current ratio etc. These all ratios will tell the lender about the financial health of the company.

In a nutshell, the lender will check company’s ability to generate enough cash to cover the additional burden of the debt it is applying for. The CCR will play a critical role in determining the loan approval.

CIBIL Company Rank

How to get your company credit report?

Step 1- Visit the website- https://www.cibil.com/online/Company-credit-report.do

Step 2- Fill in the details as required in the form like name and address of the company, contact details of the company and applicant, PAN number and other details and additional information.

Step 3- Make payment of Rs 3,000 via debit/credit card, net banking or cash card.

Step 4- After making the payment, CIBIL will assign you a unique Registration ID and Transaction ID which will be mailed to your email ID. You can use the ID to access the next steps.

Step 5- Upload your KYC documents.

That’s it! You are done. The CCR and CIBIL Rank will be delivered to you at the earliest.

Alternatively, you can download the form, fill it up and mail it to below address along with the demand draft of Rs. 3000/-

TransUnion CIBIL Limited,
One Indiabulls Centre,
Tower 2A, 19th Floor,
Senapati Bapat Marg,
Elphinstone Road, Mumbai – 400 013
Tel.: 61404300, Email:info@cibil.com

Credit Score v/s Credit Rank

Though both the credit score and credit rank is for evaluating the creditworthiness, both have some distinct purpose. Have a look at them below.


How to improve your CIBIL Rank and Company Credit Report?

  • You must have taken a loan in the name of the company. Make sure you repay all your debts in time to have a better CIBIL rank.
  • Do not use your entire credit limit.
  • Take a loan for a long time and pay regular, it creates a good image for the company.
  • Keep a close watch on your loan transactions, as an error in the transactions will impact adversely to your CIBIL Rank.

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