Any action would have a corresponding reaction. While multiple correct actions may be required to achieving the set objectives, only one wrong action can ruin the same. And when it comes to financial matters, a wrong action can be devastating.
Following is the list of four such actions that can lead to ruining your credit score. In the scenario where you are not taking care of these, it can lead to severely impacting your credit profile and diminishing the chances of having access to loans and other credit products. In today’s economy, one cannot survive without loans and if the bureau report captures any negativity you may be gasping for availability of credit and looking out for a loan for low CIBIL score.
In case you are the kind of person who thinks that paying with a delay of few days is ok till the time you have paid, be assured that it does not go well with the lenders. Not only will this habit cost you a lot, owing to high late fee and penal interest that will get levied on your account, it will make the lending institutions averse to extending loan products to you.
Put yourself in a situation where one of your colleagues who has taken loans from other friends and has always paid back with delay asks you for a hand loan. You would think twice and may just simply turn down the request since you know he may not pay you back as agreed and you may have to follow him for your money.
Similarly, the banks will also be wary of extending a credit facility in case you have a history of delayed payments.
Ever one wants to get the best deal. But getting at the cost of your CIBIL score is not advisable. When you wish to avail a loan do not shop around for it. Under no circumstance should you be applying for loans with various lenders just to get hold of the best deal. A better approach would be where you call the customer care of various bank, surf their websites or get in touch with some professional who can guide you on which bank will be able to fulfill your needs at the lowest possible rates.
Remember that multiple inquiries hitting the bureau will not only reflect as hunger for credit that goes against you during the underwriting process but also impacts the score adversely. Higher number of inquiries in a short span will reduce your credit score.
The credit limit assigned by the banks is to be used. But should you be using it to the maximum? The answer is NO. Now someone can argue that why should it not be used if the bank has given one the limit? For the simple reason, that it puts you in a dark spot. If you use your credit card closer to the prescribed limits it will impact your credit profile negatively.
Be advised that credit utilization impacts your credit score. Your total exposure on credit card limits will get considered as high exposure in the algorithms and thus will show you as potentially exposed to default. So do not use the credit card beyond 40% of the limit unless there is a dire need.
When did you last check your credit report? Maybe never. If this is the case, then obtain your report today and check. As per a study conducted by Credit Sudhaar, one of four reports have errors and about 70% of the errors are major errors. It means that 70% of reports with anomalies would have errors that would negatively impact the CIBIL score. Hence it becomes highly important that you check your report at least once a year if not more.
Follow the above basic rules and stay healthy. Remember precaution is better than cure.