Factors affecting credit score !

You are probably aware that it is imperative for you to have a good Cibil score in order to qualify for a loan with an attractive rate of interest. In order to obtain a good Cibil score you need to maintain a good credit history.Now that you know the link between your credit history and credit score you are naturally keen to  do all you can to keep your Cibil credit score as high as possible. But have you ever wondered what goes into the constitution of your Cibil score? let us read through the points below :

• Your repayment history:  The first and most important thing that impacts your credit score is your repayment history. You need to clear all your bills and loan repayments well within the dates stipulated in order to maintain a good repayment history.Even a single default has a negative impact on your score.

• What you owe your lenders:  There are two basic considerations when it comes to calculating what you owe your lenders which is referred to as credit utilization. First, is the total of your credit card limits sanctioned to you and secondly the percentage of your money you are utilizing. Hence your credit utilization ratio is calculated as balance outstanding on all your credit cards as a percentage of total credit limit on all your credit cards.

• How long have you been servicing debt:  This may come as a surprise, but the amount of time you have been using credit also has an importance. Therefore, if you have been servicing debt for a longer period of time and handling it responsibly, i.e. by making timely repayments etc., it is going to have a positive impact on your Cibil score.

• The amount of new credit you have taken or applied for:  Everytime you apply for a new credit such as a loan, credit card etc, the banks and other financial institutions run an inquiry on your Cibil report to check your credit history to find out about your financial health and repayment capability.If there have been too many such inquiries on your Cibil report, it has a negative bearing on your credit score.

• The mix of credit:  Even though ours is primarily an EMI led generation, Indians are by nature averse to the idea of credit. So if you have been avoiding credit like the plague and have a single type of credit, you cannot have a good credit score, especially if you have only unsecured loans like credit cards or a personal loan. In order to score high on this ground, you must have a healthy mix of credit comprising of secured and unsecured loans and have the ability to service them well in time. Those with a mix of various credit types such as mortgage, personal loan, car loan, credit card etc. is likely to score higher than those who have a single type of credit.

A good credit score will ensure that you get a loan without any hassles at best interest rates when you really need one.
For assistance on maintaining and repairing your credit score just book an appointment with our experts at www.cibilconsultants.com

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