Factors That Affect a Low CIBIL Score

A Credit Information Report (CIR) offers an individual a numeric summary of their credit history. It plays a major role should an individual want to apply for a loan, or a credit card, as all banks and financial institutions run a CIR as part of their loan approval process.

A credit score constitutes a part of the Credit Information Report. Basis the financial information provided by lenders to Credit Information Companies, a score is determined. This score, based on a scale of between 300 and 900, is what is taken into account by a lender prior to offering a loan.

With Credit Information Bureau (India) Limited (CIBIL) a score of 750+ points is considered to be good. For a first time borrower with no previous track record, a score of -1 is displayed.

Different Credit Information Companies however, may have different scoring parameters. Most companies use the definition of ‘bad loan’ as a customer going more than 90 days past in 12 months.

Let us take a look at the factors that can negatively impact your CIBIL score.

Multiple loans and credit cards

Having too many loans and cards can prove detrimental, as it can indicate a high level of borrowing. This would mean that a potential lender may choose not to sanction any further loans as your repayment capacity may already have been maxed, your income. Further, it may get difficult to manage payments between multiple cards, and can lead to your having to stretch your income in order to keep up.

Not using your credit card

Having a credit card with no usage, makes the customer’s file inactive as there is no transactional data. This in turn can negatively impact the score.

No loans at all!

On the other hand, having no loans or no credit cards makes it difficult for a lender to assess your repayment capacity. Hence it may be a good idea to maintain a loan or card well within your means, to set a benchmark for future borrowing.

Delayed and skipped payments

This is typically the case with credit cards, wherein a customer does not make a timely payment owing to the fact that it slipped out of the mind. What would help in this case is to set up payment reminders and ensure that the outstanding dues is paid up as per the payment dues date. Even a single skipped payment can have an adverse impact on your score.

Increased credit limit

While this may have a feel-good factor, it may not have such a positive outcome after all! Constantly increasing your credit limit may again indicate a high level of debt. Instead, keep your card dues to approximately 30% of the assigned limit.

Not using your credit card

Having a credit card with no usage, makes the customer’s file inactive as there is no transactional data. This in turn can negatively impact the credit score.

Too many unsecured loans

Personal loans or an excessive number of credit cards can mean higher payments owing to higher rates of interest, these being unsecured loan products. This can result in a lower score.

Now that we know what can affect your score.

Financial discipline

Timely and full payments on loan and credit card outstanding go a long way in maintaining your CIBIL rating.

Having a healthy product mix

Balance of secured and unsecured loans shows that an individual is capable of handling finances well. This can help you to improve your CIBIL score.

Perks of Getting Personal Loans Online

Personal loans are the prime way to get some immediate money at hand. There are many lending institutions and financiers who will provide with immediate financial assistance to genuine and potential loan applicants. These lenders provide such gratifying terms that the borrower is obligated to avail a loan with them. That said, these loans are the most convenient methods to avail a quick loan especially during emergencies. Keeping in mind the urgent needs, most lenders provide personal loans online options too so that it is more convenient for the borrower.

Personal Loans Online Options:

Most of the finance lenders provide simple online tools on their websites for availing a personal loan. You may use these online options either to apply for a loan or for exploring the details for getting a much-needed loan. These online options on the lender’s website can be used to check and compare the interest rates, loan processing fees, and other charges which the lenders might charge you for availing a loan with them. A borrower can avail either an installment loan or an instant payday loans via online application process, although most of the times it is an instant payday loans for short-term purposes.

Here are a few benefits which a borrower can seek while getting an online loan –

1. It is convenient –

Imagine a sequence in which you are filing an online loan application while sitting on your cozy bedside and then, another scene, where you are running out in the hot sun and waiting outside the lender’s room to file a loan application. Which do you think is more convenient? Undoubtedly the online option!

2. Save A Few Pennies –

Most P2P submitted loan applications are levied with other additional fees which may increase the repayment amount or the EMIs, depending on the loan type you are availing. However, with an online application, you will not have these additional fees which will help you save your cost.

3. EMI and Other Calculators –

There will be options for checking and calculating the interest rates and the respective EMIs or the loan repayment amounts. The digital calculation tool will solve your doubts regarding the complex calculations for the EMI amount with the interest rates, etc.

4. Information Accessibility –

All the information required to know about a loan process and other related details will be displayed on the website by the creditors. There will be all the data and cue related to the APR, the eligibility criteria, the repayment options, processing fees and other additional fees if charged, documents needed, and other small detail regarding the loans will be provided on the online portal.

5. Least Possible Documentation –

Unlike the banks, personal loans do not need any elaborate verification and paperwork to be done. These lenders do not consider the credit scores and will provide loans for bad credit without any collateral. The only needed documents will be to prove your age, residency, income, employment, and checking account details.

Tips to Improve Your CIBIL Score

A good CIBIL score can help you in achieving many of your life goals with ease. Whether its that dream house that you have been planning or the dream vacation, you have been coveting, access to credit can ease the process substantially. A bad CIBIL score on the other hand can make access to credit very difficult. But there are ways in which you can improve your CIBIL score and achieve your goals.

Some of the ways in which you can improve your score are

Pay EMIs on time

The cardinal rule of good credit history is to maintain your payments in time. This factor plays a crucial role in your score and any delayed payments adversely affect your score. Make sure that your bank account is funded well in advance of the EMI due date, so that there are no bounces and unnecessary penalties due to the bounces.

Using your credit limit

Use your credit limit on your credit card prudently, because over utilisation or maxing out your credit card month on month can affect your credit score. Also not paying your outstanding due amount every month and just paying the minimum amount due monthly can affect your score. For example, if your credit limit on your card is Rs. 50,000 then make sure your are not spending more than 50% of the same ie not more than Rs. 25,000 on your credit card.

Credit Hungry Behavior

Any credit hungry behavior ie applying for too many credit cards or loans within a short span of time can affect your score adversely. Plan your credit requirements in advance. If you are planning to buy a house, make sure that you don’t apply for any other types of credit like personal loan or car loan in the preceding 3 months, so that getting an approval for your home loan is easier and smoother and your eligibility is higher. Too many enquiries in your credit report is a sure way to get your loan application rejected by lenders.

Check your credit report periodically

It is a good practice to check your credit report periodically. Check for details like loan closure etc are updated correctly. Some banks fail to update the bureau in which case it might show erroneously on your report thereby reflecting on your score. Get issues like this sorted by raising the issue with the bank and bureau and sorting it out immediately. Sometimes, loans and credit cards which you have never taken might also reflect in your credit report, in which case, it is best to highlight the issue to the bureau and get it resolved so that it doesn’t impact your score negatively.

CIBIL score of 700+ is usually considered good enough for getting your loan application approved. Follow some of these rules and you can see a positive impact on your score within a few months.

Benefits of a Credit Card

Every bank is people friendly, and they have a variety of credit cards to assist people in case of emergencies or untoward situations. You can select any card suitable to your lifestyle and their customer-friendly executives are always at your beck-and-call for assistance. All the cards have cash back schemes, reward points and offers any time of the year. Having a credit card offers you the convenience of making one payment compared to paying cash for various services.

Benefits

Yes, selecting the best card is a challenging task, but not an impossible one. If your job involves going on tours, a travel card offering discounts on hotel bookings and flight tickets will be the best option. Also, you have the option of paying by this card instead of paying by cash in a foreign land. If you are one who shops regularly, a card offering discounts on popular labels, electronics at suitable outlets will be the best option.

In an unforeseen-emergency, you can make the payment, but can have the big amount changed to EMIs. Repayment is mandatory, however, you can schedule the payment as per your convenience after going through the guidelines.

Some of the card fans opine the monthly c.statement to a diary where you do not have to note the purchase items. An option is also available where the purchases can be easily sorted.

Making regular payments on your dues automatically rewards you with a good credit score. A wonderful track record will always assist you in securing a loan.

Forget the past of standing in long queues at a bank; you can apply for your favourite credit card in the comfort of your home or office. Make a visit to the website, browse the required column and select your favourite card. The personal details have to be filled as required and then click the “Apply” option. The next step is to keep ready the copies of Identity proof, Income proof and address proof for the verification process.

Highlights

Handling expenses is difficult, but more challenging is the task of paying bills. The world is in your fingertips provided you know how to handle technical gadgets and have a credit card. You do not have to step out of your home to pay bills of any category, be it electricity, mobile recharge and other requirements.

Live hassle free and avail of the Mobile Bill Pay option of the Bank. Ensure you do the right clicks, update correct information and the bill. You have done your part to Mother Nature by saving paper and making the best use of your time.

Features

The internet has given rise to cyber criminals who make use of every opportunity to swindle money at your cost. However, all the credit cards are safely protected as they have an EMV chip (also protected by PIN) by which every transaction is made secure. The chip cuts down drastically any possibilities of skimming and counterfeit fraud transactions.

You can use the card to access airport lounges (for a nominal fee), shop online for clothes, gadgets, book tickets of your favourite shows etc. Similar to every credit card, you will receive an SMS instantly after a transaction to the mobile number registered in the directory.

You can also withdraw cash at any ATMs in the world (however, you have to inform the bank for some credit cards about going to a foreign country). Fees will be applicable as per the guidelines. Payment by card just got better with these points.

• Booking by credit card gives you discounts on movie tickets and outside dining.
• Depending on the card, you will get refunds for fuel surcharges.
• Family members of primary card holders do not have to pay fees for becoming an add-on member.
• Joining fees may be waived if you make a purchase of a particular amount or above using the card.

Eligibility

You should have attained the age of 18 years or older

You should maintain a minimum amount as per the requirements of the credit card
If you are applying for a credit card the first time, you have to provide proof of your income, address. In case you already have an account, your KYC information will be checked once again for authenticity.