Whether you know anything about cibil score or are learning how cibil score is calculated, the biggest challenge is to know what are the factors that affect your cibil score. A lot of people have been asking us this question because they think it’s going to be easy. In reality, it isn’t! If you ask about all factors that impact your CIBIL score then you will get complete details about every factor and its effect on looking for a new lender. There are many factors affecting your CIBIL score but here we’ve listed the most important ones:
1. Repayment History
This is one of the most important factors that affect your CIBIL credit scores. In fact, a good repayment history reflects that you have been paying off your debts on time. If you have not been repaying your loans on time, then it could be reflected in your CIBIL score and it can lower your score by up to 50%. So if you are planning on buying a house soon or applying for a new credit card, then it is essential that you pay off all your existing debts before starting any new ones. The longer you take to repay loans or other forms of debt, the higher the chance of having a poor CIBIL score.
2. Period for which you have been taking credits
The second aspect that affects your CIBIL credit scores is the period for which you had been taking credits. This is because it shows how long you have been managing your finances and whether or not you can pay back on time as well as what type of bank account you use to deposit money into. The longer the period of time taken by a person to manage his or her finances, the less likely it is that he or she will be able to pay off loans and other debts in time which can affect their CIBIL scores negatively.
3. Outstanding debit
The third aspect that affects your CIBIL credit scores is if one has an outstanding debit due to some reason or other such as paying off old loans or other debts which has remained unpaid for a long time without any updates from creditors indicating otherwise.
In this case, the score is calculated by taking into consideration the number of days that the account has been outstanding and how long it has taken to settle it.
For example, if you owe someone money and have been trying to settle it for a while now but they still haven’t received the full amount of your debt yet, then it will affect your score or your company cibil score negatively since they are likely going to take action against you if they don’t get paid in full soon enough.
4. New credit
New accounts or loans that you have opened for the first time in the past 30 days will be counted as new accounts. New loans are those that you have taken out after applying for a loan for the first time but before getting approved for it. If a person has multiple loans with different banks and their balances do not add up to more than 30 days, then their credit score will not be affected if they continue taking more loans from that bank.
5. Credit mix
A mix of different types of credit cards such as instalment loans, retail store cards, car loans etc. In general, it is better if you have more than one type of card with different banks so that there is no one-size-fits-all approach when calculating your score.
6. Credit utilisation ratio
This is a measure of how much of your credit limit you are using to pay off your debts. Your credit utilisation ratio is calculated by dividing the total amount of outstanding balances as a percentage of your total credit limit.
If your credit utilisation ratio is high, it means that you are overusing your available credit which could be putting you at greater risk of delinquency or defaulting on payments. To maintain good scores, aim for a low credit utilization ratio — ideally below 50%.