What Factors Make your CIBIL or the Credit Score Lower?

The credit score is an enormous constituent when it comes to the loan. The credit score will define whether you are going to get the loan. A low credit score will be somehow a drawback for you. It would be best if you had a good credit score for the loan approval smoothly and effectively. The credit score considering mainly four factors:

Payment History 30%
Credit Exposure 25%
Credit Type and Duration 25%
Other Factors 20%

The unsecured loans different times

The unsecured loans several times will be going to make you in trouble. This will add to the burden of slowing down the cibil score if you could not pay the bill. The CIBIL score will make you against the term that from the next time, you are not going to get the loan from any of the banks as the banks will still provide loans at a low-interest rate, but when it comes.

Extensive utilization of the credit limits overutilization for the loan will be the factor effects sometimes. The utilization ratio should be followed by when you are applying for the loan. All the amounts by the whole credit limit are the ratio you can find the utilization ratio. If your percentage increases by more than 30, the bank will not give you a loan in any aspect. Having a high credit will expose you as a big defaulter. Indicating the red flag to the lender that it’s risky to sanction you the loan.

Payment not on time

The payment you have chosen at the end of the month or the tenure you have selected is when you have deposited the money. But when you fail to pay the repayment, this will make you a defaulter, and when there is a guarantor who will be there, the lender will follow them. So it will be a problematic situation for you in all aspects.

Credit inquiries for the loan

The credit inquiries will be one of the factors affecting you to decrease the credit. There are two types of inquiry like the hard inquiry and soft inquiry. The hard inquiry denotes when you have applied for the loan, the lender will try to get the inquiry. The lender will check whether you are creditworthy. A hard inquiry several times will affect the credit score. The decrease in the credit score will be around 5-10.

That is problematic when you are running out of credit score. If you have a low credit score, it will be an issue for you in the hard inquiry. The soft inquiry is when you will check your cibil score that will not decrease the cibil score; unlike the hard inquiry, this is the most significant problem.

Hence, there are many ways to emulsify the credit score situation, but these factors will be an issue when the credit score gets low. When it gets low, the credit score will be problematic for you not to get the loan on time. So, to keep track of the cibil score before applying for the loan.

FAQs about the CIBIL 

What is TransUnion CIBIL? What does it do?

Ans. TransUnion CIBIL Limited is India’s first Credit Information Company, commonly referred to as a Credit Bureau. We collect and maintain records of individuals and commercial entities’ payments about loans and credit cards. These records are submitted to us by banks and other lenders every month; using this information, a CIBIL Score and Report for individuals is developed, enabling lenders to evaluate and approve loan applications.

✅ Why is my CIBIL Score important for getting my loan sanctioned?

Ans. The CIBIL Score plays a critical role in the loan application process. After an applicant fills out the application form and hands it over to the lender, the lender first checks the applicant’s CIBIL Score and Report. If the CIBIL Score is low, the lender may not consider the application further and reject it. If the CIBIL Score is high, the lender will look into the application and consider other details to determine if the applicant is credit-worthy.

✅ What is a CIBIL Score, and what factors affect my CIBIL Score?

Ans. CIBIL Score is a 3 digit numeric summary of your credit history, derived by using details found in the ‘Accounts’ and ‘Enquiries’ sections on your CIBIL Report and ranges from 300 to 900. The closer your score is to 900, the higher are the chances of your loan application getting approved.