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Key factors that affect your cibil score

Outstanding Credit Card Debt

Some borrowers simply pay the minimal amount required each month on their credit card payments, leaving them with an outstanding balance. They are unaware that this might lower their credit score.

Too Many Loans/Credit Cards

If a person seeks for a number of loans and credit cards, every time a bank analyzes his or her credit record or score to process the loan or credit card application, it is considered as a hard inquiry. A score loss may be the result of making too many difficult inquiries.

High credit consumption -

If a borrower spends more than 30% of his or her credit limit, it will have a negative impact on his or her score because it will demonstrate that they are dependent on credit.

Questionable Payment Behaviour -

One of the primary factors affecting your score is your payment history. It's pivotal to make on- time payments for your loan EMIs and credit card debts. According to CIBIL study, a 30- day delinquency can lower your score by 100 points( as reported by the Financial Express). It's advised to set up reminders and notifications if you have several credit cards and loans so that you do not miss or hold up payments. Any overdue or skipped payments have a negative effect on your CIBIL score and give the print that you are inconsistent in repaying loans.

Higher Credit Utilisation Outstanding Debt Ratio -

Keeping an important thing in your conscience is to follow your credit utilisation. It’s the proportion of the credit used in relation to the credit available that matters. According to experts, you should only use 30% of the given credit limit. If you've ever tried to use 50% or more than that, it is implied that you’ll see negative impacts on your credit score.

Paying the Minimum Amount Due -

If you consistently pay only the minimal amount owing, you risk falling into a debt trap. The interest on your outstanding balance will grow if you roll over the loan by making only the minimum payment. So, it is recommended that you pay off all of your credit card debt. Additionally, it exhibits sluggish repayment habits.

Inaccuracies in Your CIBIL Report -

The details and history of your credit transactions are recorded thoroughly in the CIBIL report. It’s important to check it and report any inaccuracies or mistakes that might affect the score negatively.

Lack of a credit mix -

A healthy ratio of secured and unsecured loans must be kept in place. Examples of secured loans include mortgages and vehicle loans, whereas an example of an unsecured loan is a credit card. A healthy ratio of secured and unsecured loans must be kept in place. Examples of secured loans include mortgages and vehicle loans, whereas an example of an unsecured loan is a credit card.

Time Frame of Credit History -

A lengthy credit history aids creditors in making an informed choice when extending loans to you. It is best to concentrate on establishing credit history early in life so that you have a solid credit history by the time you apply for a house loan or auto loan. The total number of years that have elapsed since you initially opened a credit account is your credit history, to put it simply.

How to maintain a healthy cibil score?

At least one credit product should be used

Getting loans approved under their own names might be challenging for those who have no credit history. Even if they are approved for a loan, the interest rates will still be greater than those provided to those with credit histories. In order to keep your credit history and raise your credit score to 750 and eventually close to 900, it may be a good idea to obtain at least one credit line, such as a credit card.

Credit Consumption

You should constantly be aware of your credit utilisation ratio while using the credit option. This ratio contrasts how much credit you have available vs how much credit you have already utilised. This percentage makes up 30% of your final grade.

Loan inquiries

Before making a decision, check with a few banks if you want to buy a new automobile or obtain a loan to purchase your ideal property. Making several inquiries may result in a black mark against your name, which negatively impacts your score. Each inquiry you make to a financial institution is noted and has an impact on your credit score, making it more challenging for the bank to evaluate whether or not to provide you credit. Your CIBIL score drops for each inquiry.

Conclusion

I hope you have got the perfect overview of all the queries about how to avail and maintain your CIBIL thoroughly without affecting your credit limit or score. The point is to make the payments on time and spend 30% of the credit limit you’re availed of, a healthy habit we would suggest.