Surprising things that affect your Cibil credit score

Your Cibil credit score evaluates your credit worthiness. While you might be paying your bills on times, it is not the only factor that affects your credit score. Here are some surprising things that could alter your credit report.

A lot if written about how one can boost the Cibil score and clean up your Cibil report but there are some surprising things that can hurt your Cibil score. Here are some things which will make you sit up and think.

Cutting down the number of your credit cards:  If you thought applying for a credit card is what brings down you score, you are right but you cutting down on the number of cards that you hold also bring it down. While applying for a card leads to a hard enquiry, cancelling some credit cards mean your total credit limit goes down and your credit utilisation moves up. 

Requesting for an increase in credit limit:  You may think that the credit limit that the bank has allotted on your credit card is low and hence request for a higher limit. When you make such a request, the bank will ask CIBIL for your report to assess your credit standing. This means it is a 'hard' enquiry which will brings down your Cibil credit score. So until you really need it, do not request for a higher limit.

Being super cautious about using your credit card:  Many of us think that credit card usage might lead to excessive spending and bad credit habits. The fact remains that without spending and repayment history, the credit bureau is unable to rate your credit standing. Lack of credit transactions or no transaction will make your credit file inactive on the Bureau; it brings down your credit score. So it best to make regular small transactions, say grocery purchases, and pay the credit card on time.

Not checking your Cibil report for mistakes:  It is always good practice to check your credit report for any errors every 6 months or so. Often there is mis-reporting or delayed reporting by banks, which may result in faulty information on your Cibil report and a reduced score. For instance, you may have had a delayed payment in the past which shows up in your credit report but the last couple of years all payments have been on time. If you can procure a document from your lender that there is no outstanding payment and all EMIs have been paid on time your Cibil report can be rectified.

Having no loans:  Most of us have credit cards but not everyone has a loan account. Your Cibil score benefits from a good credit mix both revolving credits (credit cards), as well as non-revolving or EMI based credit (a home loan). It shows your diversity in handling different types of credit. 

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