Business Credit Reports: How to Maintain a Good Credit Report?


In our previous blogs, we talked about why your business credit report is important and how to read your credit report like a lender. Now let’s talk about how you can improve your CCR to ensure you qualify for the loan you need at the right terms and ROI.

  1. Always pay your loan EMIs and other outstanding dues on time to maintain a good repayment history.
  2. Try to maintain a low credit utilization ratio, meaning don’t rely too heavily on your credit card, to improve your creditworthiness.
  3. Sustain a long and good credit history to improve your business’ credibility.
  4. Always maintain a feasible amount of outstanding debts, so that your repayment ability is not affected.
  5. Maintain a good balance between your assets and available liabilities.


What are some factors that influence your CCR?

Remember these factors vary based on the credit rating agency preparing the report.

  • Capacity

    Refers to the ability of your business to repay the loan. The capacity of your business is decided based on its current and future income, the sales of the business’s products, the popularity of the brand in the market, and many other factors.

  • Collateral

    The kind of assets and properties your business owns makes a massive difference in the availability of a loan and the extent to which a loan can be expected. Here, assets and property include business inventory, accounts receivable, equipment and machinery, commercial vehicles, land, factory, stores, and other tangible assets. Based on the net worth of these assets and properties, the ease of getting a loan is determined. Pledging any of the assets/property can ease the process of getting a business loan.

  • Capital

    The capital investment made by the proprietor and/or partners is an essential factor when you seek a business loan from a lender. Only if you make sufficient investment can you approach a lender for additional capital in terms of a loan. If the capital investment is not up to the mark, you should not expect a loan.

  • Financial ratios

    There are several ratios associated with a business that can determine its creditworthiness, such as liquidity, leverage, inventory, turnover, receivables turnover, gross profit margin, and return on sales. These factors can give insights into the financial condition of your business in detail.

  • Repayment history:

    Taking loans is an essential part of running a business. However, how well you manage to repay the loan as agreed upon while taking the loan acts as a primary indicator of your business’ efficiency.

  • Size and life of the business:

    The older a firm is, the higher the possibility of the business having a better score. A start-up usually has a lower CCR. This is because businesses that were established a long time ago would have seen continuous growth and are believed to be more credible by lenders when compared with newer and smaller businesses.

  • Industry

    The industry of your business can play a huge role, as lenders tend to decide on the risk factor based on the industry you are in. The risk associated with some industries may be higher, as businesses in those sectors can be unpredictable and subject to many economic and political factors. Therefore, a business in such an industry may be considered less creditworthy.


Now that you know how to improve the creditworthiness of your business, be sure to apply these practices to your business. Your CCR does not build overnight. Businesses must build their score over time, improving it with every subsequent loan you get and repay. It is also crucial to regularly check your CCR to make sure all your loan repayments are being registered correctly and contact the credit agency if you notice any red flags on the report.