Improve Your CIBIL Score

4 Innocent Things That Actually Affect Your CIBIL Score

Here’s the Top 4 Things Secretly Hurting Your Credit Score

Your CIBIL score evaluates your credit worthiness, that is, your ability to meet debt obligations. Paying bills on time alone is not enough to maintain a healthy score, which is affected by several factors, including some which you may not suspect to have the ability to hurt your score.

Check out the following top 4 surprising things affecting your score and take appropriate measures to keep your credit score strong.

Closing some credit cards

You probably know that applying for a new credit card can pull your score down, but do you also know that reducing the number of your cards has the same effect?

A new credit card request leads to a hard inquiry, which in turn negatively affects your score. On the other hand, when you reduce the number of cards on your name, your score goes down mainly because of a higher credit utilization ration.

Risha, an HR Manager in an MNC in Mumbai, had a total credit limit of Rs 2,00,000 from 5 cards. Her average credit card spending was Rs 60,000 (a credit utilization of 30%). She closed 2 cards, bringing total credit available to Rs 1,30,000. However, her average credit card didn’t alter. Her credit score, as a result of the closure of two cards, dropped on the following two counts:

  • Her credit utilization had increased to 46%
  • She had lost the credit history that she had with the two surrendered credit cards

Requesting a raise in the credit limit

Whenever you submit a request to your bank to increase the credit limit on your card, it pulls up your report to assess your credit worthiness. In other words, a hard inquiry is made. Each hard inquiry made on you, as you may know, affects your score. Solution: Don’t submit such a request unless you absolutely have to.

Using your Credit Card Rarely

Using your credit card recklessly is a bad financial behavior, and to a certain extent, from the perspective of your credit worthiness, so is using your card super-cautiously.

Without repayment history, CIBIL cannot rate a user’s credit standing. No or few transactions will make your credit file inactive, pulling your score down. Use your card regularly for making small transactions at least, like purchasing grocery, and pay the bills on time.

Not reading your report carefully

Delayed reporting or misreporting on a credit report is not as uncommon as you think.

Don’t you pay for someone else mistake. Check your report for errors every six month and take corrective measures if needed. For example, you may have had missed a credit card payment in the past, which, although cleared, is still showing up on your report as outstanding balance. Contact the lender to notify him of the error and submit required proof for a speedy removal of the error from your CIBIL report.


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