With borrowing on the rise in recent months, you need to position yourself as a reliable borrower to get the best loan deal from lenders. Banks and non-banking finance companies (NBFCs) usually require applicants of unsecured loans to have a CIBIL score of 750 or higher. Those looking for a secured loan should ideally have a score of 700 or higher.
A good score is a sign that a borrower is creditworthy and poses a low risk of default. A high score not only allows you to get better credit offers but also quick approvals so you can meet your urgent needs without compromise or delay.
While you can easily learn how to check CIBIL score with an Aadhaar card, PAN card or other IDs from various financial institutions or on the CIBIL website, you may not realise that certain actions you’ve taken may contribute to bringing down your score. Since boosting your CIBIL score takes both time and effort, realising these mistakes and changing your credit habits can be of great help. Take a look at the 7 mistakes you may be making, which are impacting your score negatively.
Being disorganised about repayment deadlines
Personal and professional pressures often disrupt our schedules, but when it comes to paying your credit card bills and EMIs on time, it pays to be disciplined. While missing one EMI is not the end of the world, having a history of missed payments is sure to bring down your CIBIL score as it shows unreliability and lack of financial order. Taking deadlines lightly is a mistake and you can easily set auto-reminders and automated payments to streamline repayment. If you are genuinely having difficulty repaying, speak to your lender to restructure your loan or explore debt consolidation options instead of missing due dates.
Maxing out your credit card regularly
Using up your card’s entire credit limit once in a while is fine. Making this a habit isn’t as it increases your credit utilisation ratio, which lowers your CIBIL score. Utilising all the credit you have at your disposal shows that you are credit-hungry and cannot manage your funds responsibly. So, ensure you try to keep your total credit utilisation ratio under 30%.
Applying for many credit cards and loans at once
During an emergency or an occasion such as a wedding, you may be inclined to apply to multiple loans and credit cards to check the offers you receive and decide if you want to borrow later. This casual move can be a big mistake as multiple, simultaneous credit enquiries can decrease your CIBIL score. All your applications for credit are recorded by credit information companies like CIBIL as banks and lenders always check your score before approving or denying your application. Too many such enquiries make you seem hungry for credit. So, you should check if you really need funds, see if you qualify as per the lender’s eligibility terms, and only then apply for credit.
Share
Tweet
