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.
Recently my ECS form is not cleared and I made direct payment to bank for my personal loan, will it effect my CIBIL score?
Hi Gourav,
I am writing this as a i felt that you are perfect person to help me.
I used to have one credit card from ICICI bank where in i settled the CC for 18k (The actual ammount is 43134 with intrest)
CC Date opened :22-12-2008
CC date closed:11-03-2011
Date of Last Payment :22-02-2011
Date reported and certified:28-02-2014
parallely i took one consumer loan and cleared it.
After that i made few enquiries in the year 2011 which got rejected because of cibil score.
a year back in 2013 i pulled up my cibil score it is NH.
then i took a two wheeler lan and cleared it completly.
But for some reason the loan details are not reflecting and when i chekced with my bank they said that it is a direct payment but not a ECS clearance thats the reason it is not reflecting like that.
Still my CIBIL Score is NH
Still my score is NH and I want to know can i apply for cc or personal loan?
My personal loan is rejected recently.
what should i do to get a personal lan approoved and have the recent consumer loan updation in cibil.
Iam eligable for applying a credit card if my cibil score is NH and i settled my credit card
Please help
Hi,
what will be the status of below mentioned points in my CIBIL(Settled or Closed or written off / and what will be DPD) in my case :
1. I was having HDFC Bank credit card –> Card is permamently blocked–> I have cleared full amount that was asked from bank.
2. I have taken PL from HDFC of 50K and I was supposed to clear this by April 2014 but I cleared it on 10th Nov 2014 in this also I have cleared all the dues whatever was demanded from bank(full due amount including late fees I have cleared) but only thing is I have paid late by 7 Month.
3. I have taken Auto Loan from Bajaj Finance of 50K and I was supposed to clear this by May 2014 but I cleared it on 13th Nov 2014 in this also I have cleared all the dues whatever was demanded from bank(full due amount including late fees I have cleared) but only thing is I have paid late by 6 Month.
If i am applying for Credit Card or PL now will I be able to get ?
Presently I am not having any credit card or PL or any loans.
Thanks in advance 🙂
Regards,
Avinash
Dear sir
My cibil score is 600 as on date, can I eligible for a personal loan of 5 lakhs for 36 emi.
I don’t have any credit card n loan running.
My take home salary is 52500/- per month which is credited in axis bank n I m also applying for a personal loan of 5 lakhs for 36 emi.
Can I get the loan or ls guide to how could I improve my cibil score card.
Thanks n regards
Rakesh
Pls guide
Hi,
I lost my citibank credit card no & i want to pay my overdue as soon as possible. Because of this I am unable to take loan. I also checked at Bank end but they are unable to find by personal details.
So help me to get my citibank credit card.
Hi,
I was using an SCB credit card in 2005 and had a balance of Rs 1000 which was unpaid. I completely forgot to make the payment from my end for this outstanding amount. Later in Year 2012, an entry was made in CIBIL report in the defaulters list. When negotiating with SCB, they ask for a lumpsum Rs 25,000 for CIBIL clearance. I have never received any statements / mail communication in the meantime from 2005.
I have the following questions for which I need your help to understand.
a) Can SCB make a CIBIL entry after 7 years? Is this valid?
b) Is there any other way other than paying Rs 25000 and settling the dues for the principal of Rs 1000?
c) Will approaching Banking Ombudsman help?
Thank you in advance.
Hi,
My credit score is N/A as per cibil report. 7 years back I took HSBC credit card and used for once or twice. But then my name added to defaulters list as I didn’t pay it on time. Later I applied for loan then I got to know that cibil included my name in defaulters list. So I paid the credit card outstanding balance with fine and got the NOC also from HSBC. It’s 4 yrs done that I got the NOC. Then I again applied recently for credit card and loan also. But the loan got rejected. Can somebody pls help me out how to get the loan as I have already paid the money to HSBC and got the NOC also? and my cibil score is N/A as of now.
I mean my credit card score is NH. So pls help me how to make it to 750?
Hi Sir,
I had a dispute with HSBC in 2008.
That time my card limit was 17000.
I failed to paid it.
last EMI i paid in Dec 2008.
Now i checked my CBIL score is 603.
There is a outstanding amount is 26000 after several wavers.
Should i go for settlment or close it from. Which way will help me in future but still i am unable to pay full 26000 to bank.
tell me the way to improve my CBILL.
I am planing to buy a CC through FD.
I also want to apply loan for last in 2015.
Please help me
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I recently got SBI credit CARD but i feel cheated by customer care team as the card is with annual fees and there are cards free of cost so if i close the card within first30 days after settling dues on time will it impact my cibil score or whaht is the right time to close such card where i feel cheated
Hi,
Actually my credit score is 721, but i have some delay payments.
I applied for so many loans but all got rejected.
I spoke with one of the banker before applying and he told that 720 is enough for that bank and as i got 721, i again applied but still got rejected.
My question is if there are any delay payments how can my score got 721 and if that bank will lokks only for score (720) why my loan got rejected.
Your valuable answers will be appriciated.
Thanks in Advance
Mahesh…
Hi,
I checked my CIBIL score and it reads 795 then i applied for Personal loan with Bajaj Finance and it got reject citing CIBIL norm does not met. In past 2011-12 i used to have 4 CCs which had dues to paid. I made all the outstanding payments for all 4 cards once i became financially sound in mid 2012. I can see all four card showing close status and one of them from SCB has a status as WRITTEN-OFF. Now i am not sure why they made this as written-off though i paid entire outstanding amont after few months of default. Please help me how to get it removed from CIBIL .
Hi Ravindra,
You should approach SCB and ask them to get it rectified in your CIBIL report. If they do not cooperate in this matter, you should approach CIBIL for dispute resolution.
http://www.onemint.com/2012/09/14/cibil-dispute-resolution-process-rectification-of-discrepancies-in-credit-report/
Sir,
I have applied for citibank credit card last week with required documents and phone verification also over. salary wise i am purely eligible for credit card.but now i got the email from citi bank, that my application was rejected.”We regret our inability to process your credit card application as it does
not fulfill our internal policy criteria”. I got the information from customer support team that the application was rejected due to CIBIL report is negative. I was surprised to hear that as i have never used any credit card / borrowed a loan / any liability in the past.
for my clarification i applied for CIBIL report also by paying rs.470. it will take 7 business days to deliver.what could be the reason for the rejection.
My only guess is i am having IOB saving account, that was locked 2 times due to non usage of the account more than 6 months.
Is may be the reason for CIBIL negative report?
please advice.
Hi Swaminathan,
I don’t think non-usage of a savings bank account could be the reason for a rejection of a credit card. Please wait for your CIBIL report to know the exact reason.
Hai Sir,
I got my CIBIL report. my score is showing as ‘NH’.
And i don’t have any credit history so far.
What i have to do next.?
Your credit card application probably got rejected as you don’t have any credit history or your income level does not match Citibank’s criteria. So, you should probably approach some other credit card company or take some secured loan first like a home loan or a car loan.
My credit score is 609.
I would like to whether iam eligible to take any home loan in future from any bank??
At present I am in UAE with 11000 /- AED salary
Hi Akbar,
Though your credit score is low, it depends how much home loan you need vis-a-vis the value of your property. CIBIL credit score is not the only criteria banks check before taking their decisions. Still, it is better to get your credit report and try to improve your score.
Hi,
I am planning for a home loan now. I have 5 personal loans all 5 with a clean record. And a Citi bank credit card last month I had an outstanding which I couldn’t clear but cleared this month. How would credit score look like please advice.
Need your advice urgently.
Hi Suresh,
It is not going to affect your credit score in a major way. For precise score, you need to buy your credit report.
HI All, I had applied for my first credit card(CiTI BANK) . But they had rejected my application , HOw come they can reject my application form even if i doesn’t have any credit card history . i doesn’t have any loan also.
Hi John,
It is the banks’ discretion whether they want to issue a credit card to any customer or not based on his/her income and credit score.
Hi John,
We will help you in coming out of the rejection phase and improving your CIBIL Report.
9892191855
I have cibil score 695 and have one ecs bounce this month which is not mention in my cibil.so i have two question,
1.am i eligible to get education loan and what are the chances.
2.how much my cibil be reduced?
Hi Ritu,
Only the lender(s) would be able to tell you whether you fulfill their loan criteria or not. Also, we won’t be able to tell you how much your CIBIL score would have reduced due to one ECS bounce.
Hi shiv sir…..
Pls help me out .. It’s lil crutial….. I hve two credit cards… One is with citibank whose credit limit is 86000 out of which available balance is around 8000… Nd the other card is with hdfc bank whose credit limit is 50000 …. Of which 15350 is available…both cards were issued in the month of january 2014.. I converted a part of the credit ( around 60 k ) into installmenys nd the rest of the amount is shown as due in the statements …. My concern is regarding my cibil report… I always made payments on tym … I hve revolved the credit but hve always made payment more thn minimum due nd before due date…..
I plan of applyin for a new card as my cards are now more thn 6 mnths old… So that i can get loan on card ehich i can use to repay these cards.. As there comperative interest would be very low…. So sir pls help me out… Shd i go ahead and apply for the card or shd i not do that coz a rejection will hurt my credit score ?? I have never defaulted any payments..will my score be good or average or bad… Approximately… Sir i am relying on your experience… Pls help me out….. Thanks in advance
Hi Ankit,
Your score would be fine and I don’t see why your application would get rejected. You can go ahead and apply for a new card.
Hi Shiv
My current CIBIL score is 836.
In 2009, I first got to know about cibil when my home loan application got rejected. I tried to find out reasons, it was due to 3 credit cards and one personal loan, this happened due to address change
I immediately followed up with the credit cards and settled them, also I settled personal loan. Currently my credit cards show as settled but personal loan shows a written off.
I continue to have 1 credit card with clean payment history.
with CIBIL score of 836, can I apply for a home lone now?
Yes, you can go ahead and do that. I don’t foresee any reason for a rejection.
Hi Rahul,
did you get the loan ?
I also have background like your’s and I dont have lacs of rupees to pay the full amount.
Thanks,
SKG
Granting or rejection depends on Bank, Some of Banks can even reject on Settled account and some Banks can even Grant.. Decision lies on Bank whether to grant or reject..
Written off Means you are not making the payment and also bank is not able to recover it from you, which increases chances of rejection.
Regarding if you wanna remove Settled Status or Written off Status we will help you for same. We will help you in rectifying as well as improving the score.
You can call me on 9892191855
Hello,
My CIBIL score in 647 and loan gets reject 3 times now. I have taken a loan of 50K and due to some my personal problem i left the company and not paid EMI upto 4 month…Suddenly i got legal notice from bank to pay the amount…At the same time i paid all the remaining amount with late fine of 7K approx. Apart from this i am using 2 credit cards and paying bill on time. Now which bank will provide me personal loan as its quite urgent need to Loan.. Please advise me and also how to increase my CIBIL score and i dont have any other option apart from Loan. Please advise…