NOTE : You can get your CIBIL score on your phone for FREE.
Not using credit cards: Too many of us are wary about using credit cards. We believe that using a credit card can result in careless spending and poor credit habits. Therefore, even if we have credit cards, we prefer not to use them. Your credit file will become inactive as a result of this type of non-transaction on credit cards, which could also lower your credit score.
No loans/credit cards : Your credit score may be impacted by not having any debts and having numerous credit cards. Many of us have a large number of credit cards, but not even one lending account. Your CIBIL score could be badly impacted by this. Your credit score may be raised by having a well-balanced mix of both revolving credits like credit cards and non-revolving credits like a home loan. It demonstrates your versatility in managing various credit types.
Delayed payments : Your credit history and credit score may be severely impacted by late and missed payments. Such actions show that you are either unable to settle your present debts or are not sincere about doing so. Your credit score will consequently decline. As a result, establishing a strong credit score is greatly influenced by your repayment history. Therefore, be sure to make timely payments on all of your bills. Additionally, keep a close eye on both your individual and joint accounts to make sure no payments are missed.
Multiple loans and credit cards : Multiple loans, both unsecured and secured, could lower your credit score. Similarly, holding several credit cards could lower your credit score. Because they show just how much debt you already have. Before processing your loan request, banks or other financial institutions typically look at your debt to income (DTI) ratio. If your DTI ratio indicates that you are already overextended, they may not be prepared to extend you additional credit. They will assume that you are unable to pay your monthly EMIs. However, having several credit cards does not necessarily lower your credit score; cancelling old credit cards might also have a negative impact. You lower your total amount of credit available when you close a card. This will have a negative impact on your credit utilization rate, one of the most significant elements used to determine your credit score, unless you cut back on your spending. Your credit score could be impacted if you have several loans, credit cards, both active and cancelled, and new accounts.
One time settlements of loans: It will be submitted to the CIBIL agency and will be viewed as a negative point when a bank or lender writes off the borrower’s debt. Instead of classifying it as a closed account, CIBIL will refer to it as settled. Your CIBIL score would be reduced a few points when a debt is declared paid. For the following seven years, the borrower’s credit score will decline by 75 to 100 points. Therefore, because of his CIBIL score, no lender will permit the borrower to take a loan at this time. Before extending a loan, the bank or lender checks the borrower’s CIBIL score; if his past record indicates any settlement or non-payment, the loan. For people who are unable to repay loans, a one-time settlement may seem like a comfort, but the price they are paying for their refusal is far more than anything.
Increasing credit card limit frequently: Although having a higher credit card limit allows you the freedom to take on more debt, if not handled carefully, it could harm your credit rating. Before approving a loan, lenders attempt to determine the borrower’s net worth, which is defined as assets minus obligations. Increases in credit card limits on a regular basis may indicate a need for borrowing to manage expenses, which raises a red flag for lenders.