CIBIL Score: Why my Credit score is not going up [4 Reasons]

Written by Sravan

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If you apply for a Car loan, House loan, or Bike loan, the first thing the bankers look at is your “Credit score or CIBIL Score”.

No Banker will provide Loan without checking it.

As an individual, “You should take good care of not only the Assets you own but also should care for the Debts you owe to others”

There may be a few things that stop you to not grow your Credit score. In this thread, I will discuss 4 major reasons which stop you from growing your CIBIL Score.

Let’s see..!!

1. Credit Enquiries

Let’s say you need a loan of Rs.5,00,000/-. You might have enquired with those two or three banks. Then, the bankers will verify your Individual profile credit score with Third party companies with your submitted documents.

So, no matter how many banks you apply for a Loan, all the banks will also check your credit score with your profile. In case the banks check your credit score repeatedly over a short period of time, then there is an absolute chance that your credit score will be decreased.

So, you will fall into the category of “Risky borrower” in the eyes of the bankers. So, don’t make more credit inquiries, it might reduce your credit score.

2. Payment Habit

Let’s see another Case.

In case you have taken a Credit Card and its limit is Rs.5,00,000/-.
So you Shopped, recharged, Paid Electricity bills, and Booked New movies through your Credit Card.

Let me ask you one thing..!!

Have you paid your Credit Card Minimum due payments on time?
Yes, Sometimes I Pay and Sometimes I will delay.

In case, if you pay your Credit card payment within the due date, then, your credit score will be good enough. There will be no damage.

In case, if you miss the Due date, then, your credit score might be in danger. Because the Credit card company will provide a Credit period of 30-45 days depending upon the Banker and credit card type.

For any reason, if your Credit card payment is missed by at least one day after dude date, then, there may be chances that it might get affected in CIBIL Score.

Normally, for those who delay the Credit card bill or Loan EMI payment by the due date, the Bankers will wait for 1-2 days after the due date. But if the amount is still not credited, then, there might be a chance that the banker will report your non-payment to the Credit card companies. Then such payment will stay on your credit report for almost 7 years.

In general, It is the mistake made by many people here that when Friends & Relatives want to buy any item online, they use your credit card saying that there is an offer on your credit card.
If your friend delayed the payment, then, you might be responsible to clear this payment.

So make sure to maintain your credit score is always more than 750 points. Then, your credit score can be considered as a healthy credit score. So even if you miss the due date of the Credit card or Loan by one day, you are also liable to be charged with a huge penalty.

So if your Credit score goes down, you should not miss clearing the dude even for a single day. To clear it within the due date, you can enable an “Auto Debit option” in your bank account, it will help to some extent.

3. Credit Utilization ratio

Mr. Suresh, says, “My card has a Credit limit of Rs.10,00,000/- and I use it for all my needs and wants. Great right..!

Then, Mr.Suresh should know about the “Credit Utilisation Ratio” before using it.

Financial Experts suggest that it is better not to use it beyond 30% of the Credit Limit. That means if the Card limit is Rs.10,00,000/- x 30% = Rs.3,00,000/-. It means it is not advisable to spend more than Rs.3,00,000/- through your card.

4. Close the Loan

Have you taken any Personal loans or Home loans earlier.!
Then, make sure that you have closed it completely after paying the amount in full.

It means that after clearing your loan, banks have to consider your loan account as a “Settled” or “Account sold” category. In case, your loan is kept with a little pending amount mistakenly, then also your Loan account might be considered “Negative”.

If you have a negative balance like this, it shows that you have not paid the loan yet, so there is no chance for your score to increase.

Therefore, consider all the above points to improve your credit or CIBIL score and Be healthy financially.

Author is a Qualified CMA with rich industry experience for more than 6 years. He is an All India Ranker (AIR-101) in CMA and also a Semi-Qualified Chartered Accountant having a quite good experience in teaching the subjects of Accounting and Costing to the commerce aspirants.

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