What are the factors affecting your CIBIL credit score?

Updated: Saturday, May 25, 2013, 13:52 [IST]

A good CIBIL credit score is extremely important to improve your credit worthiness, if you wish to avail a loan. Banks and financial institutions will generally study your credit score before they disburse loans. Whenever you take loans, a data is submitted by lenders to credit reporting agencies like CIBIL (Credit Information Bureau India Limited) on a regular basis.

If you have not defaulted and honoured your debt obligations, you are likely to get a good credit score. A good CIBIL score is important to improve your creditworthiness if you are planning to take a loan. A bad score means you are going to find it increasingly hard to get a loan or credit card. Also read how to improve your Cibil score?

The following are among the factors that affect your credit score.

Past track record of Payment

Making late payments or defaulting on your equated monthly installments or dues clearly reveals that your are unable to fufill your existing obligations. This is likely to affect your score negatively.

High utilisation of credit limit

High utilisation of credit limit will only prove that you are in desperate need of funds. Say for example your credit limit is Rs 1 lakh on a credit card and your consistently reach that limit then it is not good for your rating. This is because your existing obligations are already high.
Higher percentage of credit cards or personal loans
You should learn to strike a balance between your secured loans and unsecured loans. A high proportion of unsecured loans is not in your interest.

Multiple accounts

Having multiple credit cards and accounts in various places, is certainly not good for your credit score. On the other hand a streamlined process wherein you are working on just a couple of accounts and just one credit card would do wonders for your credit rating.

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