If you have ever applied for a credit card or a loan, you know what big a role your CIBIL score plays to facilitate the same. From the amount of your loan, to the interest rate of your loan – all depend on your CIBIL score. The standard practice to maintain a good CIBIL score is to pay your dues on time. Having said that, there are other underlying factors that contribute towards your credit score as well.
Here’s the factors that affect your Credit score:
This is the most important point and something that everyone should keep in mind after they’ve acquired a loan or a credit card. If you consistently pay your EMIs or credit card bills late then this will majorly hamper your credit score. Always avoid this practice.
Not paying your dues is even worse than paying them late, not repaying your dues not only adds to your debt but it also drastically hurts your credit score.
Third Party Collections
If the lender cannot convince you to make timely payments then it sends collectors after you to take the due. The very reflection of this act on your credit history contributes towards a major dip in your credit score.
If you’re labelled as a loan defaulter then the chances of you getting a loan from any lender becomes slim. No organisation would want to lend to someone who has a complaint against him/her in the Credit Bureau as a defaulter.
Get to know reasons to check your CIBIL Score Regularly.
If you are in severe debt and file for bankruptcy then your credit score will take a major hit. This shows on your credit report for as long as seven years making it difficult to take a loan or a credit card any time soon.
Credit Card Balance
Never exhaust your credit card balance. Having a high credit card bill means a higher rate of interest. You get entangled in the endless cycle of only clearing the interest and not paying the actual amount. This is a very bad practice and in extreme cases the lender may even blacklist you for life.
Closing old credit cards
It is advised to have a long credit history, so closing a credit card without paying the annual fee will do more harm on your credit score than good.
Closing a credit card with balance
If you are in debt and want to discontinue the usage of your card, it is advisable that you clear off the due first and then close the card. Should you close the card without repaying the balance, your score gets affected?
Multiple Credit Card Applications
If you apply for several credit cards at once, this may make the lender suspicious and they may assume that you’re financially unstable leading to harm your credit score.
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Not having a good mix of credits
If you only have credit cards under your name and no loans or vice-versa they may not contribute much to your credit score. It is advisable to have a mix of both to show an elaborate credit history and repayment capability. Having a good blend of both improves your credit score.
We hope this helps you in working towards a greater credit score. If you’re looking for a personal loan, Finserv MARKETS is your go-to place with low EMI, instant approval, minimal documentations and many more features to benefit from. What’s more? Your loan application can get approved under just 3 minutes and the loan amount can be credited to your bank account within just 24 hours! So why wait? Apply for Personal Loan with us, today!
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