In order to maintain a good CIBIL score, you must pay consideration to the following factors:
What is your repayment track record? In other words, are you paying your instalments on previous loans or credit cards regularly within the designated timeline? If yes, then your CIBIL record is going to be good. Your ability to repay past debt has 35% weight-age in the calculation of the CIBIL Score. Hence, make sure that you stick to due dates of maintaining your EMIs.
- Credit Utilization
It is the ratio of the balance amount that you owe to your lenders or total of your credit card limits. Hence, if the balance amount that you owe to lenders is high, then it signals riskiness. The rise in balance amount means an increase in repayment burden and may negatively impact on your CIBIL score. Credit utilization has 30% weight-age in the calculation of your CIBIL rating. Hence to score high CIBIL score, keep your outstanding balance to banks and in financial institutions as low as possible.
- History of Debt servicing capacity
Are you paying EMIs and credit instalments happily for many years? If yes, then this will have a positive impact on your CIBIL scores. Financial institutions and banks prefer candidates who have taken loans earlier and have serviced the debt regularly. It sends the signal that the person has a long history of securing debt and has been responsible in his/her repayments. This has a weight-age of 15% in the calculation of CIBIL score.
- New Credit
If you have applied for too many credit cards or loans in recent times, then it has a negative impact on your CIBIL account. Financial institutions and banks will see this increased activity of loan applications as unsafe because your debt burden has raised and it may affect your repayment capacity. Hence, be careful with your loan applications. Unless your income has risen substantially, do not apply for too many credit cards or loans at the same time or within the short interval of time. In other words, space out your loan applications prudently. This has a weight-age of 10% in the total calculation of CIBIL score.
- Credit mix
Many times, we have seen that people have a high propensity to apply for unsecured loans. As the name implies, unsecured loans are not secured by any mortgage or guarantee. If you have often availed unsecured loans (personal loans) or credit cards, then it will bring down your CIBIL record. It is always advised by experts that one should always have a mix of both secured loans as well as unsecured loans. Secured loans are a home loan, car loan, etc.