Financial Transactions That Can Harm your CIBIl Score

CIBIL score is an important factor when you are looking for credit in the financial market as a loan or credit card. Lenders take into consideration your score, age, income, and other important factors before offering a loan. While you might have a good CIBIL score, some financial transactions can adversely affect your CIBIL score. Let us know more about it.

Factors that can harm your CIBIl score:

CIBIL score is a numerical representation in the range 300-900, which depicts your ability to repay the credit. Some factors which can harm your CIBIL score and negatively affect your borrowing capacity are:

1.      Irresponsible Payment Behaviour:

Payment history has the highest influence on your CIBIL score. Thus, it is important to pay your loan EMIs and credit card bills on time every month. An analysis that was reported by Financial express states that ‘a 30-day delinquency can reduce your score by 100 points’. SO make sure you have no outstanding debt and your payments are done on time.

2.      High Credit Utilisation Ratio:

The amount of credit used to the credit limit available is the credit utilization ratio. Experts say that this should not cross 30%. A high utilization ratio acts as a red flag among lenders as it indicates a high risk of defaulting.

3.      Length of Credit History:

Credit history is the number of years since you have a credit account. A longer credit history means a better CIBL score as it shows you are less likely to default. Also, if you close your credit account, it can harm your CIBIl score.

While the CIBIL score is a great tool for building trust among lenders while applying for an online personal loan, one small mistake from your end can harm your CIBIl score badly. So, take your financial decisions wisely.

Must Read: Heres Why Credit Score is Important for Personal Lending