CIBIL Score Tips: You are paying your loan EMI on time but your CIBIL score is decreasing, Is this the reason…

It is said that if you want to keep your Cibil Score better, then pay the EMI of the loan on time. But sometimes, despite paying the EMI on time, the credit score starts decreasing and people are unable to understand what is the reason for this. Actually, apart from loan repayment, many factors are responsible for your credit score. If you make any mistake there, then also your score can be spoiled. Understand about them.

Credit Utilization Ratio

If the credit utilization ratio is wrong, then it can affect your CIBIL score. Credit Utilization Ratio (CUR) means how much of the credit card limit you have used in a month. It is important to maintain it. CUR should not be more than 30%. If you spend more than the credit card limit every month, then it sends a message to the bank that your dependence on the credit card is very high. The bank considers you credit-hungry and this affects your credit score.

Taking personal loans repeatedly
If you take personal loans repeatedly, then also your credit score is adversely affected. Actually, how many unsecured loans and how many secured loans you have taken earlier, determines your credit mix. A personal loan comes under the category of unsecured loans. If you repeatedly take unsecured loans in the form of personal loans or credit cards, but you have not taken too many secured loans, then your credit mix gets disturbed. This sends a message to the bank that you are short of funds and your dependence on credit is very high. In such a situation, your CIBIL is affected. However, if you have been taking both secured and unsecured loans when needed and have also paid all of them on time, then your credit mix remains balanced.

If you have become a loan guarantor…
If you have become someone's loan guarantor, then it is also your responsibility to repay that loan on time. If for some reason the borrower is unable to repay the loan, then the loan amount is shown as a liability in the guarantor's credit report. This also affects the loan guarantor's CIBIL score.

Applying for a loan or credit card repeatedly
When you apply for a loan in a bank, the bank or other loan institution takes your credit report from the credit bureau. This is called a hard inquiry. If you apply for a loan or credit card several times in a short period, then the number of hard inquiries made for you increases. In such a situation, your CIBIL score may decrease.

Credit age
Credit age also matters in the case of CIBIL. It is calculated from the date of your first credit (credit card or loan). The higher your credit age, the better it will be for your score. A person with a credit account of 3 years or more will be comparatively more preferred in the market.

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