CIBIL Score: Apart from not repaying the loan, the CIBIL score gets spoiled due to these 7 reasons…

A credit score alone decides whether a bank or finance company will give you a loan or not. Credit score plays an important role in determining your reputation in the eyes of banks and finance companies.

When as a customer you apply for any type of loan from banks or non-banking finance companies, these institutions evaluate your credit score before giving you the loan.

Based on credit score, it is decided how much loan can be given to a person. What’s more, credit score also affects the interest rate payable on the loan. Apart from this, if your credit score is low then banks or agencies may refuse to give you a loan.

There are seven such negligence in bank-related transactions, which have the potential to affect our credit score. Before your credit score gets spoiled, you should also understand that you too are not committing this carelessness.

Missing EMI-

If you miss payment of your loan EMI, not only is a penalty imposed on you but it also indicates your inability to repay the loan.

No loan history-

If there is no active loan account or credit card, then banks or companies have nothing to understand your credit score. You do not have any credit history based on which banks or companies can decide to give you a loan.

Not using a credit card-

If you have a credit card but do not use it, the lender will not be able to trace your repayment pattern. Not using credit cards can hurt your credit score.

Inquiry about loan-

Inquiring too much about the loan makes you a risky candidate in the eyes of the lender. If you make loan inquiries more than once, your chances of getting a loan reduce, because lenders consider it a sign of high credit risk, which affects your chances of getting a loan.

Lots of cards and loans-

Having a lot of unsecured loans and multiple credit cards is considered a sign of wasteful spending by the customer. One problem with having multiple credit cards is that you have to maintain payments for each card every month. Your credit score reduces due to default in payment or late payment.

Use of EMI option-

Converting credit card payments into installments indicates spending more than the repayment capacity.

To negotiate and settle-

The loan borrower has to pay not only the principal amount but also the interest accrued and any incidental charges imposed by the lender. It is the primary responsibility of the borrower to repay the dues on time and the lender has the right to recover the entire amount.

However, in case of exceptional circumstances, the borrower can request the lender for a one-time settlement, upon which the lender allows the borrower to repay less than the outstanding amount. However, later it has a serious impact on the ability of the loan taker. If you have negotiated with a lender to repay your loan, it is not good for your credit score.