CIBIL Credit Score Negatively Affect: CIBIL is a popular credit bureau in India that provides credit scores to individuals. These scores are crucial in obtaining loans such as home loans, car loans, personal loans, and business loans. CIBIL uses unique and scientific methods to calculate credit scores, which financial companies in India widely accept.
Having a high CIBIL score increases your chances of getting a loan. However, the credit score is not solely based on your repayment capability; your financial profile can result in a high or low score. It’s not uncommon for someone who has defaulted a couple of times to have a good score, while others with timely repayments may have a low score.
This article will discuss the negative factors that can affect your CIBIL credit score.
CIBIL Credit Score Negatively Affect:
Defaults in Repayments:
Your repayment history is the primary factor that can negatively impact your credit score. Any delays or missed EMIs on your current loans in the past few years can cause your credit score to decrease. Such irregularities suggest that you are financially unstable and unable to fulfil your current commitments.
Full utilization of your Credit Limits: – CIBIL Credit Score Negatively Affect
Your credit card’s credit limit can also impact your CIBIL credit score. If you frequently hit your credit card’s limit, it indicates that you have a significant repayment burden, which can negatively affect your credit score. Conversely, having lower outstanding balances on your credit card statements can improve your score.
Owning too many Credits Cards or Personal Loans: CIBIL Credit Score Negatively Affect
Having numerous credit cards may earn you admiration from your peers, but your CIBIL credit score is insignificant. Possessing multiple credit cards indicates that you rely heavily on credit and are burdened with the responsibility of repaying the debts incurred through those cards. Similarly, taking out many unsecured personal loans with higher interest rates than secured loans results in larger repayment responsibilities and, at times, greater defaults. It is crucial to remember that as the responsibility of repaying your debts increases, your credit score decreases.
Are you Credit Hungry?
If you frequently find yourself in dire need of money, it can be a sign of being “Credit Hungry.” This leads to applying for numerous credit facilities with multiple lenders, resulting in a significantly low credit score. Such behaviour serves as a warning to lenders while assessing your creditworthiness for future loan approvals.
Therefore, it’s crucial to consider these four essential factors to avoid damaging your CIBIL Credit Score.