What Hurts Your CIBIL Score? Can You Review Your Credit Report?

Hassle-Free loan approval is inevitably associated with a high credit score. There are multiple lenders across the nation that state 750+ score as an eligibility criterion. In such a scenario, it is always advisable for a loan borrower to order a copy of their credit report and check their score before applying for a big-ticket loan. Just in case the score turns out to be lower than the ideal range, borrowers are suggested to take the requisite measures to improve their score before moving ahead with the application.

Of course, rather than facing the wrath of a poor CIBIL Score, it is always in your interest to know of the causes that may lead you there beforehand. It is for this very reason that we have consolidated a list of factors that may hurt your credit score, and how you can and should steer clear from them.

1. Irregular Credit Repayment

Whether you’re servicing a loan or using a Credit Card, irregular payments of EMIs or your monthly Credit Card bills will reflect poorly on your credit behaviour, and may even lead to a blow on your credit score.

A simple way to avoid this is to automate your EMI payments and to ensure timely payments of the credit card bill, preferably in full every single time.

2. Credit utilization limit

If you consistently use more than 40-50% of your credit limit, it denotes a credit hungry behaviour. In most cases, credit bureaus consider it as a lack of financial discipline on your part. Needless to say, it results in a diminished score.

A CUR of 30% is usually considered ideal, and hence you should try maintaining the same as far as possible.

3. Multiple loan applications

There may be times when you’re in desperate need of financial assistance for your personal or professional obligations. At such times, it is obvious to get tempted to apply to multiple lenders. However, before you do so, you must realise that each of your loan application will warrant a hard check on your Credit Report by every lender you approach. Multiple hard checks in a short frame of time will reflect your desperation for credit, and your inability to meet your obligations. This will subsequently lead to a low Credit Score.

4. Excess of Unsecured Loans

Procuring an unsecured loan in the present day scenario has become more than just convenient, thanks to their ready availability and convenient eligibility criteria. However, taking too many unsecured loans, as against secured loans leads the lenders and credit bureaus to believe that your personal finances are out of order, which drastically reduces your eligibility to get an approval for a loan application. This further hurts your credit score.

It is always advisable for you to have a mix of secured, unsecured, long-term, and short term goals under your name. This helps improve your credit score over time.

5. Not Assessing Your Credit Report

It is not uncommon to find errors in one’s credit report or simply delayed updation of facts and figures. All of this together may reflect a poor credit score, even if you have been diligent with your credit and your personal finance.

A simple way to turn this around is by checking your credit information report, at least twice every year for any errors that might have crept in. If you find any such issues, you can raise the matter with the credit bureau and get the discrepancies rectified. This will eventually help in improving your CIBIL Score.

6. Offering Guarantee for a Loan

If you offer a guarantee for a friend or family member who’s borrowing a loan, and they end up defaulting or are simply delay the payments, it will adversely affect your credit score.

While you ought to help your loved ones in times of need, when offering a guarantee, you must be upfront regarding timely repayment of the loan with the borrower.

Can You Review Your Credit Report?

Of course, yes! There are as many as 6 Credit Bureaus in India, namely TransUnion Credit Information Bureau (India) Limited (CIBIL), Credit Rating Information Services of India Limited (CRISIL), Equifax, ICRA, CRIF High Mark, Experian. For what it’s worth, you can order one free copy of your credit report per year, from each of these bureaus.

Since the underlying data compiled by each credit bureau is more or less the same, you will get a fair idea of your credit score, regardless of the bureau your order the copy from.

Not only can you assess the details of the report once you have it, but you can also raise any grievances you might have pertaining to the incorrect details mentioned therein. Moreover, if your score is less than 650, you can take the recommended measures to improve the same.

While it is advisable to review your credit score at least once a quarter, you should also review the same when