CIBIL score: CIBIL score gets spoiled due to these reasons, ignoring it will be costly...

Whenever you need a loan, the lender first asks for your CIBIL score. In such a situation, if your CIBIL score is low then you may face difficulty in getting a loan or you are given the option of loan at a higher interest rate.

First, know what is CIBIL score.
It is a three-digit number or rather a score. Its range is from 300 to 900 marks. This shows your eligibility to take a loan. This number is decided on the basis of your old loans, credit card bills, etc. If you keep repaying all your loans and card bills, your CIBIL score improves, whereas if you commit any default, your CIBIL score gets worse.

CIBIL score ranges between 300-900, with a credit score above 750 helping to get your credit card or loan application approved. If your CIBIL score is 650 or less, your chances of getting a new loan are slim. In such a situation, let us know today what are the reasons for the low CIBIL score.
 
Having a high credit utilization ratio
Credit Utilization Ratio (CUR) is the percentage of total credit utilized to the total available credit limit across all credit products. You should maintain a CUR of less than 30 percent. In simple language, you should use only 30 percent of your credit limit. Suppose your credit limit is Rs 1 lakh, then you should use only Rs 30,000 out of it.
 
Having a bad credit mix
If you have previously taken different types of loans like home loans, personal loans and other loans then your CIBIL score is good as it shows your ability to handle your different types of credit responsibly.
But if you do not have a healthy mix of different credit products (unsecured or secured loans), your CIBIL score may go down a bit, although this does not have much impact on the CIBIL score.

Delay in paying bills
This plays the biggest role in reducing the CIBIL score. If you do not pay your credit card bill on time, your CIBIL score goes down very fast. However, if you forget to make bill payments once, it does not make much difference to your CIBIL score, but if you do so again and again, your CIBIL falls into the bad category.
 
Applying for multiple credits at once
If you apply for new loans and credit cards from many lenders in a short period of time, your CIBIL is asked the same number of times, which affects your credit score because all the information applied by you is recorded in the CIBIL report Ultimately your CIBIL score reduces.
 
Errors in the CIBIL report
Errors in CIBIL reports such as incorrect account details, duplicate accounts, incorrect loan balance, errors in outstanding balance, errors in reported active loans/credit, etc. can adversely affect your CIBIL score.

Disadvantages of bad CIBIL score
If the CIBIL score is bad then you have to bear the loss also. You have to face problems in all bank-related work. Let us know the 5 disadvantages of a bad CIBIL score.

1- There will be difficulty in getting a loan:
If your CIBIL score is bad then you will face difficulty in getting a loan from any bank, small finance bank, or NBFC. Banks fear that your CIBIL score is bad, which means you may default.

2- A higher interest rate will have to be paid:
Even if some banks agree to give you a loan despite a bad CIBIL score, they will charge a higher interest rate. Actually, he tries to manage his risk. They think that even if the person defaults on the last few EMIs, the bank does not suffer any loss, hence the interest rate is kept high.

3- You may have to pay higher premium:
Sometimes insurance companies may also ask for a higher premium from you if your CIBIL score is bad. Actually, in such a situation, insurance companies feel that you can make more claims, in such a situation they can ask for a higher premium. Many companies may even be reluctant to provide insurance.

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