What affects your cibil score or credit score?

We at Chakde Credit believe that there are 5 Major Factors Which affects your Cibil Score or Credit Score are:-

• Payment History: 35%
• Credit Utilization: 30%
• Length of Credit History 15%
• Different types of Credit: 10%
• New Credit: 10%

Payment History:- 

                                Chakde Credit expert believes that payment history has the biggest influence on your cibil or credit score. It's important to pay your credit card bills and EMIs of every loan you got before the due date. Paying 30 or 60 days late can hurt your score by 60 to anywhere 90 points.

Credit Utilization:-

                                 It is very very important that you keep your eye on your credit card utilization ratio. According to our expert's study on scores it shows that you should ideally not exceed more than 30% of your credit limit.  If any of your cards you have used over 60% of your credit limit, it can have a negative effect on your score as it shows to lenders that you are at higher risk of defaulting.

Length of Credit History:-

                                             In simple terms, credit history means the total number of years that have passed since you have first opened or get your loan or credit card. If you have a long credit history it helps banks or financial institutes take a good decision at the time of offering you a loan or any cards. It is very important that one should focus on building a credit history in the earlier stage of life as, by the time you apply for a home or car loan, you will have a good record on your credit report.

Different types of Credit:-

                                            It is important to maintain a healthy balance of secured and unsecured loans. Home loan and Cars loan are examples of secured loans while a credit card and personal loan is an example of unsecured loans. If you have a high number of only one type of credit, it can affect your score. It is ideal to have a mix of both secured and unsecured debt on your cibil or credit reports.

New Credits:-

                       When you apply for a new loan or credit card, banks want to check your credit reports and they will do this by pulling your cibil reports. This is called a hard inquiry. If you send out to many applications, it will mean that multiple credit inquiry is occurring around the same time. This hard inquiry is reported and affect your cibil score negatively. It will make you look credit hungry. It's important that you should only apply for loans or cards when it is absolutely required for your life.

Read the Following Blog to Know How to understand your credit score?

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