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

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 skukreja@investitude.co.in

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.

276 thoughts on “CIBIL Credit Score – Negative Factors and Ways to Improve your Score”

  1. And Pankaj,
    regarding to your worry expressed that collection of financial data by so many credit institutions,I would say a word— NOT TO WORRY!!!
    Though Equifax and experian started collecting data,my experience is that no loan or card provider is giving much weightage to their reports currently.They do even consider it important to retrieve reports from Equifax and Experian at present as far as credit card applications are concerned

  2. Yes Pankaj,
    Even I could not find a conclusive answer for how does they reduced my score by 24 points.As said earlier,my score never reduced by multiple enquiries done over a period of 2-3 months.But my score does reduced by around 24 points when the new cards started being reflecting in my account.
    One more interesting fact I noticed was—
    I have cards from Citi and HDFC which were frequently upgraded or swpped to different card features.Most banks keep card account same and only change the card no under it.For Cibil they report new card no on such swap or upgrade keeping all earlier reported DPDs under earlier cards to be continued to reflect under new card as well.Thus for CITI bank I had DPDs staring from 2009 reflecting under my current card though my card was swapped 4 times in last 3 years.But what HDFC did,they reported my each single card as different card accounts making 4 accounts of HDFC.It gave a false impression that I had 4 cards from HDFC .Further DPDs history was reflecting part by part under respective cards.Thus it gave false impression that I have no card with sufficiently large history!!!
    But still my score never changed unless newer cards from other banks approved recently started reflecting in my CIR.My score only reduced by 24 points!!
    Another interesting fact is —
    I complained HDFC to merge all these cards under single card account and make all DPDs visible under single account.Now what they did,they told CIBIL to remove all cards from my account.Luckily,I was able to get a CIBIL report after removal of all HDFC cards.To my horror,my score reduced by around 100 points and came to 667!!!It gave few highlighte points at the begining of my report as below—
    1: TOO MANY ACCOUNTS WITH A BALANCE.
    2: NOT ENOUGH DEBT EXPERIENCE.
    3: TOO MANY CREDIT CARD ACCOUNTS.
    4: LENGTH OF TIME ACCOUNTS HAVE BEEN ESTABLISHED IS TOO SHORT.
    5: TOO MUCH INCREASE OF INDEBTEDNESS ON NON-MORTGAGE TRADES OVER THE
    PAST 12 MONTHS.
    I had no doubt about 1st3rd,4th and 5th points as all remainging 9 cards were reflecting which had balances execept my HDFC card which was the oldest card.But 2nd point was not correct as my HDFC card was more than 3 years old which was not visible currently.
    I was not affraid as I was assured as this will be a temporary problem as HDFC is going to report my current card and DPDs starting from my original card issue to CIBIL.They did it and in another 3-4 days time I got a new CIBIL report with all issues with HDFC corrected.Now to my surprise my score increased again to 776 level!!
    This experience proves my earlier point that its not the no of cards but the longevity of card payments and interval between cards approved and limits given over them which affects the limit.
    Now your 2nd point is somewhat correct where you said that it happened contrary to my experience and your score reduced upon multiple enquiries and not disbursal of loan.
    My view on this is all points like card payments longevity,loan approval dates and interval between them,limits issued to each card or oan and lastly as said by you loan disbursal,all these affect score.But all these variations seen by you,me and sevaral others in regards with CIBIL system may be because of following reasons
    1)though CIBIL updates data provided by banks in around 4-10 days time every month,the scoring doesnt appear to be a continuous process.Their system make changes to scores at some particular instances prediced by them as per the recent data received by them.In my opinion the so called prediced interval could be every three months or so as I found no change in my reports over a period of 3 months even after multiple enquiries.
    2) Their system might be changing the scores even then when a complete account is removed from or added in their data base.This could be in addition to the scoring done on an ongoing basis at a predecided interval like I said earlier.
    3) It might be also due to their changes in scoring system recently.But in my opinion this possibility may be very less so as to keep the uniformity in earlier and current data scoring

    Whatever may be the causes,one thing is sure that we can onl express over views and possibilities as we have no other way of confirming this at this point of time.Its very well fact that how harassing behaviour CIBIL executives show when we ask such off track questions to them.The only way for this is to wait till RBI makes credit institutions more answerable.

    1. 1) Till date I was wondering why CIBIL lists the cards which I closed long back; now got to know importance of Credit History. 2) In my latest CIR their is no “highlighted points” which you have mentioned above. Where to find these highlights? 3) Just recently got a Credit Card upgrade; let see how it gets listed in CIR – Under old card or as a new account 4) CIBIL advises in Rule 3 to not have more Credit Cards and in Rule 5 they have mentioned “Think twice before closing credit card accounts” So what is better??? [http://www.cibil.com/faq/consumer-credit-report]
      5) Just like you I use different Credit cards for availing amazing offers; my payment history is blemish free as I make TAD payment on due date thru NEFT so no chance of it affecting my score 6) After reading your above comment I re checked my latest CIR and found that for one card card payments longevity is just 3 months as it was approved recently and for other card although its was issued in 2005, credit history is shown for just 7 months. These might have affected drop in score. Will take up the matter of Missing Credit History with CIBIL. Thanks!

      Must say I am still trying to decode the maze of CIBIL CIR and Transunion Score …

  3. Gaurav, Would like to know abt the 24 point reduction in your score! as me also noticed a reduction of 24 points in my score.

    In May last year I availed Car Loan for which my banker made 2 enquirers to CIBIL in a span of Ten Days . Even after approval and loan disbursal till date bank have not updated this Credit Information with CIBIL as it is not reflecting in my CIR. So, contrary to your case my score got reduced just by multiple enquiries and not by disbursal/approval of loan…

    Shiv/Manshu,

    1) Whatz your view on multiple “Enquiry Applications” by member institutions for a single Loan/Credit Card application. Does this have a negative effect on CIBIL Transunion score or reduction in my score by 24 points is due to changes in their scoring model?

    2) How Experian and Equifax different from CIBIL as like any other commoner I am worried about collection of my financial data by so many Credit Rating MNC’s.

  4. Yes I agree with your points
    Even I am having 10 credit cards from 8 top credit cards issuers in India.Most of them are issued in last one year.But even though my score is more than 800.Hence I also feel having more no of credit cards is not bad.Its the span of credit card payments which affect the score and not number of cards.Longer the card payment history,better is the score!!!

  5. Quite informative and very useful article!

    Would like to put across that presently I am having 10 Credit Cards from 7 banks; many of these I have been using since Mid 2005. Never have I delayed payment and have been making NEFT payment since beginning. Use these cards to avail amazing offers by different card issuing banks or Visa/MasterCard.

    My latest CIBIL Transunion score is more than 800 🙂 so I believe higher number of Credit Cards doesn’t have a negative impact on the CIBIL Score!!! Experts please authenticate if my understanding is correct….

  6. Hi Shiv,

    I have a credit score of around 610-620 and at present don’t have any credit card/ loan account running .. How can i improve my score..? Should I go for a smaller loan amount may be an auto loan of around 5oK and repay the same within a year , will this be of any help?

    Thanks in advance

  7. Hi All,
    I had a credit card of Standard Chartered and few times i was unable to pay on time. My card got expired in Feb, 2011 but there was outstanding amount of Rs. 1400 at that point of time. I had received a recovery call from them in the month of Sep, 2012 and i paid Rs. 5600 and received a ‘No Due Certificate’ from SC.
    Now, whenever i apply for any credit card or personal loan, gets rejected saying your credit score is down.
    Can you please let me know what to do now so that i can be eligible for any loan or credit card?
    Really need help.
    Thanks,
    Aavesh

    1. Hi Aavesh,

      I think you should first buy your credit report from CIBIL and check why your credit score is low. If your report shows that your score is low due to this loan settlement or a long DPD (Days Past Due) and if there is something you can do to improve your score, then you should do that. Also, check the points mentioned in the article above, if any of these helps you improve your score.

      1. Hi Shiv,

        First of all, thanks alot for your prompt reply. I applied for my CIBIL report today itself and got the report today only. I had a Credit Card with SCB and a personal loan with CITI. As per the CIBIL report, my credit score is 680 and my both the account got settled now. DPD in my personal loan shows all ‘000’ that means everything is fine with CITI but for my SCB Credit Card entry, it is showing total no. of late days while making payment for that particular month.
        As everyone is suggesting the methods to improve credit scores by maintaining ontime payment for our Credit Cards and loans but in my case neither i have any credit card nor any loans then how to improve my credit score in that case?? Is it mandatory to have credit cards or loans to make credit score up??
        Please reply.

        Thanks,
        Aavesh

        1. Hi Aavesh… Your credit score is low as both of your accounts (loan and credit card) are ‘settled’. Settlement leaves some outstanding balance in your name and affects your credit score negatively. You need to pay off the outstanding balance with the SCB/Citibank in order to improve your credit score. It is not mandatory to have credit cards or loans running in your name to improve your score, but your credit history needs to be clean to have a good/excellent credit score.

          1. Hi Shiv,
            Thanks again.
            Sorry but my both account is showing that there is no outstanding pending now.
            I have paid each and every installment of my personal loan without fail on time and it got closed successfully in Nov, 2012 and i got a closing letter from CITI bank with no outstanding left. But for my credit card with SCB i couldn’t pay few bills on time but after recovery call i paid the whole amount what they asked for and for that also there is no outstanding pending now. I suspect that the only reason for my poor score card is my DPD for SCB. Awaiting your suggestions??

            1. Hi Aavesh,
              If you have paid all of your outstanding dues and still your credit score is low, then it will take some time for your score to improve gradually. The reason is simple – CIBIL credit score is based on one’s credit history, which in your case is not good. CIBIL score suggests the lenders what is the probability of you defaulting on a loan based on your credit history.

              If there is no loan/credit card payment outstanding on your name, then it is natural that your past credit history will be taken as a hint to provide you fresh loan/credit card. You can probably improve your score by taking smaller loans and repaying them smoothly.

  8. Hi,
    I have settled my 1 year old(July 08-09) HDFC CC in July 2009, by paying Rs 20K(bank was demanding approx 45K)
    Because of bad financial condition during that time. Till then I didn’t borrowed any money from any bank.
    Since Oct 2009, I was running a salaried account(Now it is Regular account) in same bank with some good transactions, last week I have applied for a CC in the same bank on the basis of my Regular account details.
    I want to know, can HDFC bank Seize my account and withdraw previous balance without my consent. will I never get any CC/Loan from HDFC or any other bank.(If yes what will be the solution), I might need HL in coming 2-3 Years.
    Thank, In advance.

    1. Hi Dheer,

      I dont think HDFC can withdraw the previous balance due from your bank account without your consent. But, they have all the right to raise their demand against you to payback. The settlement you agreed to in 2009 would ideally spoil your credit score and I think it will definitely create some problem for you in your requirement for any kind of loan. The solution would be to fully pay the bank their outstanding demand.

  9. Hi,
    My credit card application from SCB got rejected. After citing the RBI regulations and lot of persuasions I got a copy of the CIBIL report obtained by SCB. The TU score is 826. There are no defaults/suits filed.
    Payment history for all the loans shows STDSTD….. What could be the reason for rejection? They are not giving a clear explanation. They are telling “we are unable to offer you the credit facility in this point of time since the CIBIL/Credit History -does not meet bank credit norms”

    Can I demand a more clear explanation? The RBI guidelines says “banks should convey in writing the main reason/reasons which in the opinion of the bank have led to the rejection of the credit applications”.
    Whether just saying “does not meet bank credit norms” without explaining what are the “bank credit norms” enough?
    I had taken a home decor loan which is reflecting in the CIR as personal loan

    1. Certainly,you can!!!
      You are very correct about the guideline of RBI and very few people know about it not even Nodal Officer of Stan Chart Bank.
      You may send a letter to Nodal Officer of Stan Chart Bank seeking exact answer about rejection of credit card application or reprocessing of application.Do let them know in polite language that as per the guidelines of RBI its mandatory to give the exact reason failing which you will seek compensation for harassment at Banking Ombuds &/or consume court.
      I feel they will reopen and reprocess your application.Also do let me know whether you applied for this credit card by Stan Chart’s very famous Instant Approval In Principal way or by offiline application?Also meanwhile you do it ,do check whats your salary is,whats the outstanding amount on your existing loan as reflecting in CIBIL score.High sanctioned/outstanding amount in your loan may be the reason for application being considered CIBIL negative

    2. Long back Kotak Mahindra rejected my Credit Card application on some flimsy grounds (Permanent Add is that of a small town in Haryana although I was residing in Mumbai) . Later I escalated the issues with their Nodal Officer and after her intervention my card application was re processed and a card was issued to me.

      Recently, RBS closed my credit card and I had to approach RBI Banking Ombudsman for card reinstatement.

      So, incase your complaint hasn’t been resolved by Nodal Officer of SCB than you may approach RBI Banking Ombudsman.

  10. HI Folks, I had recently take my CIBIL statement & my current score is showing as 658 just wanted to know is this a good score or bad.. Thanks in advance for your answers

    1. Saddiq,
      As said earlier 658 score is a good score infact.Please read my earlier statements i revert to previous questions by others as above.Evry Bank or Non Banking Finacial Corp though consider CIBIL score as one factor to take decision on whether to extend you loan or credit card,they decide the definition of that “GOOD” or “BAD” score on their own.That means for Bank A,score of 600 is good score too extend a loan but for Bank B anything above 700 is only requisit.But still on an average a score of 600/650 or above is a Good score.Score around 500 needs to be worked on and Score around or below 450 is definitelly bad

  11. Hi ,

    In My CIBIL report one entry for 2K is showing as due for ICICI CC payment. Actually last payment of 266 Rs and paid it after 2 days of due date…and after that i moved from my address mentioned in ICICI website . Later My Home loan provide informed me that there is due in u r CC. After cross checking with ICICI they told me that they had applied charges of 4000 on late payment by 2 days…in between period i hav not got any info about the dues.

    I have two other cards SBI and CITI..with i use frequently any paymetns for these cards are regualary paid by me..Now i had paid the due to ICICI bank…how it ll impact my loan approval process…..

  12. Hi Gaurav, I’m in dire need of an answer to my concern, hope you can help?! So here we go, back in ’09 had a cc with citibank with a great credit limit, defaulted on my payments, but finally settled it off for a huge sum. Later the following year, took a personal loan which over the course of 1 year I squared it off without any failures. I have currently applied for a personal loan again with Fullerton India and i have been informed that though their rate of interest is higher but ppl like me can apply for loans and it does get approved. The requirement through them is anywhere around 600+. My question is, how good are my chances of getting this loan approved.

    P.S: I currently have 1 cc which i make payments on time for and make more than the min. payment.

    1. As per the information given by you,I dont find any reason for your loan getting rejected!!
      Your application will be looked favorably as-
      1) You settled your previous act of default which showed your comittment to take responsibility of what you requested Bank for.
      2) By doing that you not only took responsibilty but all did something which reduced harm to Bank which would have happened by your act of not clearing off your dues
      3) You took another loan later this which your cleared in just one year which speaks for itself that you are financially stable and able to pay back as well
      4) Moreover by paying credit card dues on time you have further added to the fact that you are credit responsible.
      Hence I feel your loan will be looked favourably.But ultimately it depends on Bank policies as other factors besides CIBIL does matter something.So I would advice to retrieve your CIBIL score before applying for Loan which will make your more confident for going ahead with your loan.Do check your CIBIL Score and verify if all details are correct in it and if found something incorrect then first correct it and then apply for Loan which will give you a pleasurable consequence

  13. Written of per se means you had defaulted somewhere in past but you did some settlement with the loan provider and resolved your issue in past.So Written off in that way,for some new loan provider,means some person better than a defaulter to lend a new credit to!!! Offcourse that means it lies somewhere between defaulter and credit worthy person..But having a Written Off status doesnt actually speak that the person defaulted purposefully or the incidence of defaulting was due to some other reason like mistake or dishonest behaviour of loan provider or just a missed payment of EMI which led to inappropriate penalty or may be due to reason like in your case where you moved your address and later on came to know that you have been charged huge interest on your outstanding.Thus whatever may be the reason,the new loan provider will look your application more carefully and may even ask you explanation for that Written Off stigma in your CIBIL report.Also if they ask so and find your reason for having that Written Off tag acceptable,then will definitely issue you a loan.But yes ,that depends on loan provider at last.

    1. Hi Gaurav,

      Today I checked my CIBIL score. It is 771.
      But the data is showing from last 36 month only and as I mentioned earlier I made settlement with HDFC bank in 2008 and they told me that they will share this information in CIBIL but now nothing is showing regarding HDFC bank. Only my SCB CC information is coming for which I am paying regularly.

      I want to know one thing like while applying Home loan may I disclose the NOC given by HDFC bank or no use as no information is coming now.

      thanks
      Pankaj Singh

      thanks
      Pankaj Singh

      1. Pankaj,
        You got a jackpot!! Your current score is near to great!!
        As said earlier Banks give records upto 3 years to CIBIL for updation in CIBIL.But the incidence of default remains there for 7 years.HDFC being responsible bank unlike ICICI,helped you either knowingly or unknowingly (I dont know,Lolz) by not informing the default you made to CIBIL or it could be a mistake at CIBIL’s end that they forgot to update it.Whatever may be the case,go ahead and apply for the loan you want.It will surely get sanctioned.No need t tell them anything about your NOC or default as CIBIL would have been the source from where they would have known about it but CIBIL doesnt have any record now.

        1. Provide NOC later to the loan provider only if they find about your past default later while processing your loan application.They will surely consider it with due respect.Dont worry about not providing it at the time of application only

    2. Dear Gaurav

      I had taken a PL from fulltron and I had given almost all amount , But when I applied cc and in cibil they reported write off of rs 34000 , How can it’s change

  14. HI, I had one CC from HDFC bank in 2007 and was doing all my payments regularly but in Sept 2007 I lost my CC and blocked the card immediately. At that time my 13000 balance was due and the same time I moved to other location and changed my number. In May 2008 I did final settlement from HDFC bank and paid 14000 Rs(according to them I had to pay 22000) and they sent me Final Settlement letter. Recently I applied for one CC from Standard chartered bank and got successfully(using this from last 6 month). Now I am planning to purchase one flat and will go for home loan soon. May I apply to get my CIBIL score as I already got one CC that’s mean I have good CIBIL score. Please suggest me. I do not want any rejection in my home loan.

    1. Certainly,you got StanChart Credit Card 6 months back does mean that your CIBIL Score was acceptable as per the policies of Stan Chart Bank to be eligible to extend you credit facility.Moreover your regular payment of Stan Chart credit card bills for last 6 months would have helped your score to improve further.But ultimately you have to remember that the meaning of “ACCEPTABLE CIBIL score” has different meanings as per different loan/credit card provider.For some 650 is acceptable whereas for others 700 is must!!! Hence its prudence to get your CIBIL score before applying for Loan which gives a primordial idea about your credit worthiness at this point of time!!!

      1. Thanks Gaurav,

        I want to know one more thing like As I mentioned From HDFC bank side payment was due 22000 ( 13000 k Original + 9000 k interest). I payed only 14000 rs and they did settlement so I am defaulter for 8000 Rs. In some thread I read It is good to make full payment and clear your name. I want to know If suppose I contact to bank and willing to pay those 8000 K, will they ask for interest also or after settlement they do not charge any interest on remaining amount.

        1. After paying Rs 14000 did they gave you any settlement letter?If you have been given any such letter stating the credit cardout standing has been settled then you dont need to do anything further.Your name wont be there as as a Defaulter.Rather it would be as written off

          1. thanks gaurav,

            Yes one settlement letter had been sent by HDFC bank.
            Could you please tell me what is “Written off”.

            Will it impact me while applying any home loan. I am planning for one home loan soon.

            thanks

  15. Hi, I have a couple of credit card and a personal loan default. Though I have a credit card which is being paid regularly. Will I get a home loan?

      1. Hi Shiv,

        My ICICI RM is saying that my credit limit is high ( total 3 lacs 22 thousand of all credit cards together), this is the reason credit manager was saying to reject my loan application. This is not fair, banks only give the high credit limit credit cards. My HDFC limit was 98k last year but now bank increased it upto 1 lac 98 thousand. First time they asked salary slip to increase credit limit, i denied for that. Then they increased it them self without taking the salary slip.

        But my RM is saying high credit limit is not your problem, its banks problem. You didn’t ask to increase it. And he said he will get it done. Let see…with finger crossed.

        One more thing, do i need to courier Payment confirmation slip, address proof and Personal Id proof to CIBIL or uploading on CIBIL portal is sufficient?

        Thanks & Regards
        Preet

  16. First of all send the letters of Settlements you received from Credit Card Providers to CIBIL and ask them to update the status accordingly.Further hereafter,channelise your funds regularly to pay the henceforth debits on your existing credit cards so as to get DPDs reflecting as 000 which will signify that you are out of financial crunches now and and able to withstand financial burden now onwards.
    Yes the Defaulter status will remain there for 7 years but with regular payment of your credit card dues hereafter certailnly you can improve your score till then.

  17. I have made settlement of 3-4 credit cards and now my cibil score is very low as recently my personal loan application is rejected.

    Please tell me what I have to do now to improve cibil score. Also confirm me that is there any validity for bad cibil score like after some years I will be out of defaulters list.

  18. Gaurav, it’d be great if you could reply to the following:

    1. How did you manage to get the CIBIL report from the bank where you applied for the credit card? I have tried that and have been unsuccessful; is there any method which allows an applicant to “demand” the CIBIL report from the bank he’s applying credit card at?

    2. Did the score dip a few points when you got your second credit card approved?

  19. Yes by above view of mine,I am not denying that recent enquiry means nothing to Bank or Loan provider.Yes I do agree that the recent enquiry in your CIR does raise quotion for Bank which is handelling your application of new credit card or loan!!!I do agree this view of writer.

  20. It is evrytime mentioned in most articles about how to improve score,not only here but every other article,that applying for credit facility recently adds one entry in CIR as an Enquiry and that affects your credit score. Even I thought so earlier when I used to read these articles and plan accordingly.But recently my experince was something different.I applied for 2 credit cards recently and retrieved the CIBIL report from Bank that they in turn retrieved while processing my application.Also I asked one another Bank whose Credit Card I was already holding then,to retrieve my report again.This means now I was having 3 different CIBIL reports given by 3 different banks which were generated on 3 different days with a gap of around 4-10 days in between.And most importantly every successive report was showing one additional enquiry in addition to previous enquireies keeping all other particulars same as in older CIRs.By doing this what I actually tried to check — Is it really correct that applying for credit facility recently does really affect score by giving another enquiry in CIR?
    The result was very much surprising!!! Though every successive report was showing one additional enquiry keeping all other particulars same,by that way my score should have reduced every time by say 5-25 points when some or other Bank retrieved my CIBIL report recently,BUT ACTUALLY MY SCORE WAS NOT AFFECTED AT ALL.THE SCORE THAT WAS REFLECTING IN EVERY CIBIL REPORT WAS CONSTANT!!!!
    The score however reduced by around 24 points only when the one out of 2 credit cards which got approved recently started reflecting under my CIR!!!!By this observation its concluded that its not the recent enquiry which affects your score negatively,its the recent approval of credit facility as reflected in your CIR,which actually affects your score negatively.I can further confirm this fact when at the end of this month my other credit card approved will start reflecting under my CIR.I am expecting my sore to deep further when that credit card starts reflecting in my CIR.Lets see what happens

    1. Thanks Gaurav for sharing your experience here. Your observation is a practical example of how it works. You were probably required to have a credit card and for that you approached 2 different banks. These banks must have sent their respective enquiries to CIBIL. Just getting enquiries from banks probably doesnt affect your score.

      But suppose you already have a couple of credit cards and a similar no. of personal loans which you have not been able to serve that easily and you have defaulted on your payments a few times. Now if you approach 2 more banks for another personal loan or a credit card, then your behaviour would be considered as “Credit Hungry”. This makes CIBIL process scientific.

      Like you mentioned above, getting one more credit facility made your credit score dip by 24 points, it made me think of a company which carries huge debt on its balance sheet. If this company approaches another bank or an investor for one more loan, then it would be natural for the lender to raise suspicion.

      Please do share your experience when you get your score checked by the month-end.

      1. Yes do agree about your points..
        I never required a credit card infact.I am financially very strong but kept 5 credit cards in my Folio just to avail great offers on different credit cards.I was researching about the CIBIL and the related stuffs since long and was trying to unfold the untold myths about it.One fact that revealed from my recent experince was what I have stated above.
        Having enquiries in your CIBIL report doesnt affect your score.It is indeed addition of recent credit facility that got aproved by the bank as reflected in CIR will actually affect the score and makes it scientific.Will definitely share my experince again later this month

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