Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT
Loans For You
Loans for Business
Investment
Insurance
Apply
Quick Links for loans
Quick Links for Insurance
Investment
Offers Quick Pay
Back

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure
Know More
Back

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required
Know More
Menu  
 
Apply Now

Tata Capital > Blog > Loan for Business > Why Credit Score is Important While Availing a Business Loan

Loan for Business

Why Credit Score is Important While Availing a Business Loan

Why Credit Score is Important While Availing a Business Loan

Every business requires a sufficient amount of working capital- be it to keep the daily operations running smoothly, implement new strategies and business models or more commonly, to start a new business or scale an existing business. However, not every owner business has the funds required for handling these tasks without disrupting the daily workflow. As a result, more and more businesses owners are opting for a business loan to ensure smooth operations and effortless expansion without any setbacks.

But before applying for a loan for business, loan seekers must understand that there are certain factors which can hinder their approval. To ensure business loan eligibility, they must have all the necessary documents and a secure business plan in place. Despite having the necessary details, however, the lack of a solid credit score can result in disapproval of loan.

Credit score plays an important role in determining business loan eligibility. And so, here we discuss, the components and importance of credit score and tips to increase credit score to ensure quick approvals on business loans.

What is Credit Score and Why is it Important?

Derived from credit rating agencies such as CIBIL, a credit score denotes the financial stability and health of an individual and his business. The business credit score and credit report reveal the creditworthiness of your business by monitoring your financial history and calculating your bankability to determine whether you are capable of repaying the business loan. It takes into account your current debt obligations, how you used these debts, whether or not you repaid your debts on time in the past thereby revealing loan repaying capabilities.

Credit scores are of two types- business and personal. And while a business loan usually only requires a solid business credit score, certain lenders may even weigh in your personal score to evaluate your financial capabilities and approve or disapprove your application for a loan for business. Moreover, if hold a credit score solid enough to get an approval, it can also determine the rate of interest which is charged upon your business loan.

Components of Credit Score

In this section, we shall discuss the components of a credit score to help you understand why it holds so much power in determining your chances for approval.

  1. Payment history related to business credit cards and past or current business loans.
  2. Credit relationship with current and past suppliers.
  3. Details of all credit availed by the business entity in the past.
  4. Miscellaneous details such as industry trends related to a business, nature of the business, etc.

How to Improve a Credit Score

Whether your credit score has dropped or if you’re trying to build a good score, it is important to be regular with your bill payments. Always keep debt levels low and pay your EMIs on time. Ensure that there are no errors in your credit report and never use your personal finances for business purposes. Stay cautious while using credit and maintain a credit utilization ratio of 25%. Acquire limited debts, pay your creditors on time and make limited applications for new credit.

Looking for financial intuitions to help you with your monetary constraints? Connect Tata Capital to avail hassle-free business loans with quick approval. We offer a wide range of tailored loan for business with flexible EMI and affordable interest rates to ensure that your business grows smoothly.

Apply Now
Disclaimer

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Viewed Blogs

Trending Blogs

Calculator

Personal Loan EMI Calculator

Personal Loan EMI Calculator
Home Loan EMI Calculator

Home Loan EMI Calculator
Business Loan EMI Calculator

Business Loan EMI Calculator
Used Car Loan EMI Calculator

Used Car Loan EMI Calculator
Two Wheeler Loan EMI Calculator

Two Wheeler Loan EMI Calculator
Loan Against Securities Calculator

Loan Against Securities Calculator
Loan Against Property Calculator

Loan Against Property Calculator
More Tools
Our Subsidiaries
Our Other Websites

Important Information

Investor Information

Visit us on:,Visit us on: www.tatacapitalmoneyfy.com,www.tatacapitalmoneyfy.com

Our Private Equity Funds

Amalgamated Companies

Top Branches

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Policies, Codes & Other Documents

Most Important Terms & Conditions - Home Loans

Download in your preferred language

Download

Tata Capital Solutions & Services

Uh oh, something went wrong

Please try again later.