CIBIL Credit Score – Negative Factors and Ways to Improve your Score

by Shiv Kukreja on August 14, 2012

in Credit, Featured

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at

Many of you must have checked your CIBIL credit score sometime in the past and for some of you it must have got a surprise either positively or negatively. Some of you might have been caught unaware of a credit card account running in your name with annual charges being levied year after year. Some of you might have undergone for a loan settlement with the lender which could have impacted your score quite negatively.

But to your surprise, some of you could have found your credit score to be quite high, despite defaulting a couple of times. This is due to some unique but scientific methodologies being adopted by CIBIL to calculate your score.

Factors that negatively affect Credit Score:

1. Late payments or defaults in the past: Your payment history has a significant impact on your credit score. So, if you have missed payments on any of the existing loans over the past couple of years, then the credit score would get negatively affected as it indicates you are facing difficulties in servicing the existing obligations.

2. High utilization of credit limits: You must remain quite careful while using the credit limits available on your credit cards. A higher and higher utilization pattern against the available credit limits is an indication of an increased repayment burden and may negatively affect your credit score. Lower outstanding balances getting reflected in your credit card statements improve this score.

3. Higher percentage of Credit Cards or Personal Loans (i.e. Unsecured Loans): A higher number of unsecured loans coupled with a high utilization would also affect the score in a negative way because of the fact that these unsecured loans carry a very high rate of interest as compared to secured loans like home loans or car loans and result in larger payments and higher defaults.

4. Behaving Credit Hungry: If you are behaving “Credit Hungry” (i.e. in an urgent need of money) and have applied for new credit facilities with a large number of lenders, then it is going to affect your score negatively and make the lenders more cautious while evaluating your application for a fresh loan.

Can your CIBIL Credit Score be improved? If yes, how?

As I mentioned in my earlier post, it is like a CAT examination. Like you can always improve your CAT score by appearing for the exam again, your CIBIL credit score can also be improved, but not overnight. If you have taken a 20-year home loan which is just a couple of years old and you’ve defaulted on your EMIs 3-4 times since the beginning, then it will probably take you at least 2-3 years or probably more than that with regular EMI payments to improve your score. You will have to maintain the greatest of financial discipline in order to secure a better credit treatment in the future. Here is how it can be done.

Measures to improve your Credit Score:

1. Pay your loan EMIs regularly in a timely manner to maintain a clean credit history: Try to keep a diligent track of your EMIs in case you are running more than one loan.

2. It is highly advisable to make full payments on your credit card instead of just the minimum payment. In case it becomes very difficult to pay the bill in full, at least make the minimum payment without fail.

It takes you a longer time to build your credit history with a loan as compared to a credit card as these loans are usually for a longer tenure whereas a regular payment of your credit card bills can help you start building a good credit score as you keep on making the regular payments. A credit card debt is categorized as a revolving credit and it helps in building a good credit score faster if the payments are regular.

3. Do not apply for an extra credit card unnecessarily when your bank’s relationship manager approaches you to get one and actually you do not require it. Applying for an extra card or a loan without any requirement would mean more credit exposure and reaching near the card’s credit limit would result in a lower credit score.

4. If you have been issued a credit card but you have not used it very frequently or the utilize credit limit has been very low, then this would affect your credit score in a positive way as unused credit cards actually imply that you are financially secure.

5. You should use special incomes like bonus or a monetary gift or some other source of savings for the prepayment of some of your existing debt. Early repayment of debt also helps in improving your score.

6. Avoid becoming a joint account holder or a guarantor in a loan or a credit card facility as any default would lower the quality of your credit score.

7. Avoid going in for a settlement or “write-off” of your loan accounts as it implies that you have not been able to pay the past dues. Keeping the credit history clean improves your credit score.

8. You should keep reviewing your credit history on a regular basis to ensure that the credit report accurately reflects your current financial status.

At the end of the day, common sense should dictate what you do with your financial life and good financial habits along with awareness of credit scores will help you build a good credit history and a good credit score.

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{ 190 comments… read them below or add one }

Rajeev Sinha June 19, 2015 at 8:05 PM

Dear Sir,

I have one question regarding home loan repayment. I repay my home loan EMI thru NEFT. It will improve CIBIL.

Please confirm.

Rajeev Sinha


sachin vasant sonawane June 24, 2015 at 11:20 AM

Please im remove to cibil


a.jayakumar June 25, 2015 at 12:54 PM



Surendra Singh June 30, 2015 at 11:39 AM

My cibil score is 517 but my status in Hdfc bank shows written off. I am not using any other card or loan. How should I improve my cibil report.


a b narayanan July 22, 2015 at 8:00 AM

dear sir

i have a credit card with rs.97000/- outstanding balance paying minimum amount regularly

now i am going for a home loan with dhfl for an amount of Rs.8 lakhs

Will this affect my hone loan will it reduce home loan amount

DHFL Says i am eligible for 7 lakhs

will it decrease the home loan amount

Pls clarify



Irfan July 25, 2015 at 7:49 AM

I am having 7 savings bank accounts.I’m not maintaining minimum balance in any of these Ac’s.
Do this information be shared with CIBIL.

Please, Provide u r valuable feedback.

Thanks & Regards. .


Chiradip August 11, 2015 at 11:23 AM

I have made a online transaction using my ICICI cc and opted for EMI option, But then I have cancelled the order & the amount refunded back to my card account.
Despite this, for the same transaction the EMI is continuing.
It’s been couple of months now, requested them to stop this but nothing is happening!
How this going to effect my CIBIL score & how to stop it from appearing every month on my bill.


Saurabh Udavant August 15, 2015 at 5:25 PM

If the total value of the online purchase exceeds the credit card limit while converting the purchase into an EMI which does not exceed the credit card limit, will it impact negatively on the CIBIL score?


suman ojha August 16, 2015 at 2:24 PM

sir i did not get any loan in my life .But my cibil score is in -1 .what can i do for can i get my cilib score around 750


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