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What are the Parameters That Affect Your CIBIL Score?

By Finserv MARKETS - Dec 25,2019
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A good credit score is critical for you to get your loans approved, easily and quickly. You can’t build a fantastic credit score overnight, since the score is calculated on your credit history.

Your CIBIL (Credit Information Bureau India Limited) scores typically vary between 300 to 900. Lenders check credit scores when you apply for a loan and having a credit score of over 750 is considered ideal. Higher credit scores generally mean guaranteed and quick loan approvals, while low scores means your loan application could be rejected.

Your CIBIL score is essentially what determines the lender’s first impression of you. So what parameters are involved in determining your score? And what can really affect it?


Source: Cibil.com

How good are your payment activities?

If you made any late repayments or defaulted on your EMIs regularly and constantly, then it is going to affect your score in a significant manner. Your payment history is one of the CIBIL score parameters and has 30% weightage in determining your CIBIL score. This is why it is incredibly important to ensure you pay off your credit card bills and loan EMIs on time every month. Your CIBIL score will be reduced by 100 points if you have a 30-day delinquency. So, if you are drowning in multiple credit cards bills and big loans, then experts advice setting up repayment reminders or alerts to avoid missing or delaying payments. Missed or overdue payments lead to a poor score and this gives the lender the view that you are not consistent with repaying your credit bills. If you check your CIBIL score, you can quickly find out how much outstanding credit you need to repay.

How much debt do you have?

A major rule borrowers should follow is watching their credit utilisation ratio. It is the credit amount used in proportion to the credit limit available to you. High credit utilization is part of the CIBIL score parameter called ‘Credit Exposure’ and this has a 25% weightage in determining your CIBIL score. Experts recommend not exceeding 30% of your credit card limit. For example, if your credit card limit is 1.5 lakhs, then you do not spend over INR 45,000. Using over 50% of your credit limit has a drastically negative effect on your score. Generally, an increase in your credit card’s current balance indicates a high repayment burden. If you have a high credit exposure, you give an impression to lenders that you are at a high risk of defaulting.

How good is your credit mix?

A credit mix is a balance between the secured and unsecured loans you have. A good credit mix is one with a healthy balance between the two. Credit mix is also part of the CIBIL score parameter ‘Credit Type and Duration,’ and has a 25% weightage in determining your CIBIL score. A secured loan is usually a home or car loan while an unsecured loan is personal loan. Having a myopic credit mix, with loans secured skewing sharply towards one loan type is considered unhealthy. When you have a good balance between different credit types, you give the impression that you have experience managing different loan types.


Source: Cibil.com

How many enquiries of loans have you made?

Banks and credit providers run inquiries on your CIBIL report to understand your credit history and CIBIL score when you apply for new loans or credit cards. Multiple enquiries is also part of the CIBIL score parameter ‘Credit Exposure’. If you make a lot of applications and your profile registers a lot of queries, your score is negatively impacted. You are seen as credit hungry if you apply for loans with multiple banks or providers at the same time.

How long is your credit history?

Your credit history is measured in terms of all the years that passed after you open your credit account. A long credit history makes lenders believe they are making a sound decision offering you credit. So it is advisable to build your credit history from as early as possible. If you do this, when you apply for loans like home or car loans, you have a solid credit record. You can check your CIBIL score online on Finserv MARKETS for free and get a full CIBIL report in just three quick, easy steps.

Are you only paying the minimum amounts due?

If the answer is yes, you should shift your strategy since this could end up adversely impacting your CIBIL score in the long run. The minimum amount is a minimum portion of the principal amount outstanding every month. If you only pay the minimum, you can easily fall into a debt trap. Your interest will compound to huge amounts on the remaining unpaid balance. The best advice is to pay the full amount of your credit card bill. Bear in mind that if you don’t, this reflects very poor repayment behavior.

Do you check your CIBIL score consistently?

Your CIBIL report has detailed information on your current and past credit accounts. By frequently checking your report, you can notice any errors that are ruining your CIBIL score. If you find any discrepancy, immediately rectify it by reporting it quickly. CIBIL won’t correct any errors without you reporting new changes.

Overall, such other factors constitute 20% of your CIBIL score. By understanding these major parameters, you can easily avoid bad credit behavior that might currently be hampering your score. You should make it a point to check your CIBIL score frequently to find errors or discrepancies that are reducing your score.

On Finserv MARKETS, you can check your financial health score for free in an easy 3-step process. Once you get the free Financial Health Score Report on Finserv MARKETS, you also get a handy list of the best loan offers based on your score. You can check your score multiple times without it affecting your score whatsoever.

Put into practice such healthy credit habits when you opt for personal loans available on Finserv MARKETS. The personal loans on Finserv MARKETS have very flexible repayment tenures ranging from 12 to 60 months. You can choose a tenure that suits your financial needs and goals and ensures a healthy credit score. With zero collateral and minimum documentation needed, the application process to obtain such loans is smooth, speedy and extremely convenient.

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.


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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522