Factors That Can Ruin Your CIBIL Score
What is a CIBIL score?
CIBIL score is a number that depicts a consumer’s creditworthiness, it is represented in a numerical value between 300-900. The higher the credit score, the more attractive the borrower is to the lender.
Lenders like banks prefer to sanction a loan/ give a credit card to people whohave a score of 750 or above.
While the main elements of score composition revolves around loan and credit card repayment, CIBIL score is deduced from various elements (like payment history, credit exposure, length of credit history, types of credit and credit inquiries) and each of these elements have a different weightage.
Below mentioned are factors that can impact your CIBIL score negatively:
1. Making late payments / missing the due date
One should always be prompt with repayments because if you miss the due date of payment evenonce for your credit card / loans, it will be visible in the credit report along with the number of days for which the amount remained unpaid post the due date. The credit history takes at least 6 – 8 months to improve.
The repayment history accounts for 35% of your CIBIL score.
2. Not maintaining a healthy credit utilisation ratio
Credit utilisation ratio is calculated on how much credit is availed from the given credit limit. If your credit card limit is INR 1 Lac and you have utilised INR 40,000, then credit utilisation ratio is 40%.
In case you have multiple credit cards, the total credit limit will be divided by the total credit availed.
Credit utilisation ratio = total credit utilized (90,000) / total credit limit (3,00,000) i.e30%
Another important factor to be considered is EMI-to-income ratio, calculated as a sum of your credit card and loan repayment values divided by your income. Ideally it should not exceed 40%.
Eg: If you monthly income is INR 80,000 (take home amount, not the gross total income) and your total EMI outflow is INR 20,000 then your EMI-to-income ratio will be 25%
Your credit exposure accounts for 30% of your CIBIL score.
3. Not having a credit history
Not having a credit history surprisingly has a negative impact on your credit score. Since, credit scores are calculated based on credit utilisation ratio and credit behaviour among other factors, not having a credit history makes it difficult for lenders to evaluate whether you fall in the high risk or low risk category.
Credit history accounts for 15% of your CIBIL score.
4. Not maintaining a healthy credit mix
It is advised to maintain a healthy credit mix of secured and unsecured loans.
Secured loans are protected by an asset. The item purchased, such as a home or a car, can be used as collateral.
Unsecured loans include things like credit cards, student loans, or personal loans. There is more risk for the lender in this case, because there is no asset to recover in case of default, thus interest rates are higher for these type of loans.
A higher ratio of unsecured loans is viewed negatively too, hence, it is important to maintain a healthy balance been both.
The type of credit accounts for 10% of your CIBIL score.
5. Making multiple credit inquiries
Owning multiple credit cards can not only become overwhelming but also difficult to manage. Multiple credit inquiries can take a hit on your credit score and portray you as a credit seeker.
Credit inquiries accounts for 10% of your CIBIL score.
Start working towards improving your CIBIL score by avoiding the above mentioned mistakes and achieve a higher score by keeping the below points in check-
- Always pay your dues on time
- Review your credit history regularly
- Ensure that all old loans are ‘closed’ not ‘settled’ as when an account is settled, it means that the bank has agreed to accept a payoff amount that is less than originally owed. Always get a formal closure certificate from the lender
- Check your credit report at least quarterly to keep it error free
- Read your credit report before applying for a loan. Having a low credit score might influence lenders to charge higher interest rates or even result in rejection of the application
- Apply for new credit in moderation so it does not represent you as a credit seeker
- Do not use too much credit and control utilisation
Dussehra – the perfect day to buy a home India is characterized by a diversity of religious beliefs and practices, nearly 80% of the population of India practices Hinduism. Dussehra being a Hindu festival, celebrates the God Rama’s victory over the demon king Ravana and the triumph of good over evil. Dussehra is considered as […]
Everything you need to know about maintenance cost Owning a property is a dream for every individual and so is the need to reside in a well-maintained society. Here is everything you need to know about maintenance cost. Maintenance cost and its relevanceIn addition to owning an apartment, a maintenance cost is charged to the […]
Relaxations given by government to boost real estate sector – September’ 2020 The Coronavirus outbreak has plunged the world into a crisis like no other and is the reason for one of the greatest economic slowdowns of all times, the real estate sector in particular got severely impacted.Though, Covid-19 has made people realise the significance […]
Most Valuable Features of a New Home Looking to buy a new home? Here are some aspects to help you in reducing the decision making time, based on the most valuable features that home-buyers and families look for today. In addition to external factors like accessibility, security, the neighbourhood and its culture. As people consider […]
Accessories Can Redefine Your Home Creating an elegant yet cosy atmosphere while designing your home goes beyond just choosing the right colours for your walls and placing the furniture ergonomically.Let’s start with the idea ‘less is more’. Too much variation of furniture is one of the biggest no-no while trying to achieve a sophisticated look.Here […]
Factors That Can Ruin Your CIBIL Score What is a CIBIL score?CIBIL score is a number that depicts a consumer’s creditworthiness, it is represented in a numerical value between 300-900. The higher the credit score, the more attractive the borrower is to the lender. Lenders like banks prefer to sanction a loan/ give a credit […]
Home Care Tips for Monsoon Monsoon is here and the rain has been pouring for quite some time now. During this season, we ensure to carry an umbrella with us to avoid getting drenched in the rain and to keep sickness at bay, the same way a home maintenance schedule is essential for every home’s […]
Leisure Options in Mundhwa Once solely an industrial zone, Keshav Nagar is now a prominent residential housing market for the smart home-buyers. The locality offers its residents a multitude of benefits that include cost, comfort, convenience and connectivity. Here we’ve listed some top places to eat, go shopping and best things to do in and […]
Tips for First-Time Home Buyers Buying a home can be overwhelming as well as nerve-racking, especially if you are a first-time home buyer. But don’t worry, we’ve got your back! When you’re planning to buy a house, listed below are the most crucial aspects to be considered and common mistakes to avoid. Evaluate Your Needs […]
Owning Vs. Renting a Property There is an emotional side to home ownership and it sure does feel great to boast about your own home. Here we’ve listed some points to help you understand how owning a home is a much better option than renting one. Security & Pride of Home Ownership Pride of home […]
Affordable Ideas to Redecorate Your Home Redecorating your home can be a tedious task and can come as a big expense. Though if you tackle it with the right attitude and a defined approach, you can effortlessly redecorate your home without taking a hit on your bank account. Here are some economic ideas to get […]
Keshav Nagar, Pune- The best place to Reside, Invest & Retire Pune is one of the fastest growing smart cities and it tops the list of most liveable cities in India. An Oxford of East, Pune has attracted several foreign students every year, owing to the quality of education that it offers. It has also […]
Social Environment And It’s Effect On Child’s Development Social environmental factors that influence a child’s development are derived from their cognitive and educational attainment, risk-taking behavior, emotional, psychological well-being, motivation and physical health in addition to parenting and family impact. What are social environments? A social environment refers to an individual’s physical surroundings, community resources […]
Why choosing a branded developer is an intelligent choice It’s every person’s dream to own a home and people invest lifetime savings in buying a house that they have always dreamed of. Akin to the way brands are preferred while buying utilities, developers who have established as a brand, are emerging as the backbone of […]
Kunaal Kyhaan Seolekar talks about his thoughts and reflection on designing during lockdown Credits: Archiproducts Another episode in our series about the thoughts and reflections of designers during the lockdown. This time it’s Kunaal Kyhaan, the Indian-born designer and trained in New York, with past experience as a Bollywood actor and the soul of a […]
We’re proud to announce that Kunaal Kyhaan Seolekar who has designed the show flats for Florida Watercolor and Florida Riverwalk won ‘Designer of the Year 2019’ title awarded by Elle Décor at the 18th edition of EDIDA India hosted on 6th Nov 2019. “I won the EDIDA 2017 ‘Young Talent Award’ before, that was an […]
In the present- day scenario of cut-throat competition and saturation of employment, it is not possible to rely on a single source of income. It is imperative to make smart investments; that not only cater to your present day needs but also secure your future. However, you need to be extra-thoughtful while making investments, particularly, […]
Of all the phases that we encounter in our lifetime, parenthood is one of the most responsible and crucial phases. Parents are understandably concerned about the upbringing, education and overall holistic development of their children. In such a scenario, there are a lot of people who have been relocating their residences in pursuit of getting […]