What happens when you have a bad CIBIL Score?

Did you know, having a bad credit history might affect you? Not personally of course, but it can be a big barrier in getting the loan approval. You must have heard people discussing their CIBIL score where some might be turning their heads down when they think of their score.

Well, in this article, we are going to focus majorly on the pros and cons of bad credit history. Our focus will be on the measures through which you can improve your CIBIL score if has lowered due to some reasons.

What exactly does a bad CIBIL score mean?

A credit score is based on an individual's entire debt and credit history; there are various factors that affect your CIBIL score. Some of the factors are mentioned here:

       The repayment history (35%)
       The amount you owe to lenders (30%)
       Number of years of servicing debt (15%)
       Number and amount of recent loans taken or applied for (10%)
       The Credit Mix (10%)

How do you end up with bad credit score?

We have often talked about the factors based on which the credit report is generated but here are the mistakes due to which you harm your credit score:

       When you are a defaulter in making any of the repayments
       When you apply for a loan and get rejected consistently
       When you have never ever taken a loan and hence you have no credit history to validate

What to do when you have a bad repayment history?

You should know that a problem without a solution is just a myth. Nothing in this world is important and having a poor repayment track record is one of the most common mistakes. You can still follow different mediums to improve your track record.

How can you improve?

There are many ways that can help in improving the credit score or even create one if you are new to this. If you have a PAN card and are above 18 years of age, you have the below-mentioned options:

       Apply for a consumer loan
       Apply for a home loan
       Apply for a personal loan
       Apply for a car loan
       Apply for a credit card

Can you apply for a loan with bad credit score?

If you have been worried lately about whether or not you can get a loan, there is good news. In the case of loans, below are the factors that are considered by the lenders to consider your loan application.

       Net income
       Educational background
       Credit card bills and online expenditure
       Relationship with the lender

Why is good CIBIL score important?

You must know that in the banking industry, if you have a good credit score, you can get better deals on loans and credit cards. Even those who do not have a credit history which means they have never taken any kind of loan or have never had any credit card have 0 credit history are missing nothing. The fact however is, if you a credit history then it is an add-on. The customers who have a good payment history are preferably given better deals in both loans and credit cards. For instance, if you do not have a credit history and you apply for a loan, the lender will have no track of your past payment history which can help it trust you for the future payments. In this case, they will offer a little higher rate as compared to those who have a good CIBIL score.

What are the factors that affect your Credit Score?

There are certain basic but important factors that affect the credit score of the individual. If you manage to keep these things in mind, it will really be helpful for you.

       Avoid carrying credit cards who are of no use to you.
       Do not increase your credit limit as it affects your credit score.
       If you are using more than 50% of your credit card limit, it will affect the score.
       No-loan people also have a bad score of no credit score.
       Prepayment of the loans also affects the credit score.
       Late payments of the loan EMIs or the credit card bill.
       Positive payment history will help build a good CIBIL score or credit score.

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