Factors that affect your cibil score

cibil scoreYour credit score is the most important criteria used by banks and financial institutions to assess creditworthiness of the borrower. When you apply for a loan in any bank, first thing that a bank checks about you is your score. At the initial stage, most of the applications are rejected by banks on the basis of cibil score. Given the importance of your score, everyone should know factors that affect your score. Let us see factors that affect your score-

  1.    Multiple loans and credit cards – Having multiple secured or unsecured loans and credit cards may affect your credit score. This indicates that you are too much dependent on credit to fulfill your needs and expenses. Contrary to popular belief, closing your existing credit cards would also adversely affects your credit score as it increases your effective credit utilization rate.
  2.    Delay in payments – Delay in payments of your past payments negatively affects your cibil credit history. It indicates that you were not careful about repayment of debts that you have taken in past. This is a red flag for most of the financial institutions if there are no genuine reasons for having this behavior. A default in payment should be avoided by a borrower at all cost to safeguard himself against any negative repercussion. Hence, it is very important to regularly monitor your loan accounts and make sure that no payment is missed.
  3.    Increased credit limit – if you request for a increased credit limit on your credit card then, it will seriously damage your score as it indicates that you are too much dependent on outside credit.
  4.    Not using credit card – Contrary to popular belief, not using your credit score rangecredit card will seriously affects your cibil credit history and it should be avoided at any cost.
  5.    Not tracking your credit report – It is one of the most common mistake done by borrower community. It is often seen that, many times wrong information is found on individual’s credit report. Hence, you should regularly take out your cibil report from cibil’s website to make sure that any unnecessary information is not affecting your cibil credit history. It is advisable to check for your cibil report once a year.