Believe it or not, a credit score plays a vital role in our financial life. Whether getting a personal loan when urgently needed or getting a car loan, a good cibil score boosts your loan application for speedy approval. To get amazing loan deals, your score should be at least 750 and up. You can still get good deals if you are near about 700. As easy as it sounds, maintaining a good credit score is not an easy job. There is a lot of dedication involved when it comes to getting a good credit score and maintaining it. You will have to make all your payments on time maintain a good non-debt account. Sometimes, you will also have to play with your finances, like getting multiple loans to give that extra push to your score.
If you are one of those people, who likes to make all the payments on time, has minimum loans on their account, and is confident that you won’t have a bad cibil score. Unfortunately, you are wrong! Check cibil score on a regular basis to know about the factors that might affect your credit score. There are lots of factors involved when your credit score is calculated. Do not be under the perception that only making timely payments will keep you at the bay from the credit tornado.
Today we will sight you three unusual reasons your credit score may be bad,
- Unknown errors on your report
Despite you being at your best to have financially adhered, your cibil score can still see a dip due to no fault of yours. As we know, every financial transaction you make is recorded and stored with the credit bureaus and the credit bureaus sometimes tend to make mistakes and post wrong entries towards your account. This may be the reason why your credit score is not going up from time to time. To investigate such a case, you will have to get your cibil report and check for any errors, if you find any errors on the report, you can raise a dispute towards the transaction with necessary documents to prove if that is an error. This may take a very long time, but you will have to hang around just to rectify their mistake and get your cibil score up in no time.
- Set your priorities straight
There are instances when you run into unexpected problems and miss on making payments to the lenders. Some people take a hard hit mentally when they have skipped a payment, and they always think of making the payment of the skipped account first keeping the active accounts on hold.
For example, if you have 3 active loan accounts say a personal loan account, a credit card, and a consumer durable. For some personal reasons, you default on making the payment for a personal loan and you start getting harassment calls from the collection agencies. Just to dodge this crisis, you plan on skipping your credit card due and making the payment for personal loan EMI with the penalties associated with it. What you do not realize is that the damage is been done on your credit report, and the damage will be healed with time, even if you are making the personal loan payment, the credit report will still show your default.
So do not fall for this and set your priorities when making payments.
- Credit Utilization
If you are holding any credit cards, make sure to use a minimum of them. Using a high credit limit also can hit your cibil score but a regular cibil score check makes it better for you to keep an eye on the regular activities. The ideal utilization should not be more than 20% of your credit limit. If your limit is 1 Lakh and you are using 50k out of it, then you may see a dip in your credit score.
Calculation of a credit score is tricky and the score can go down for any odd reasons. Your credit score check makes it easy for you to be prepared and it is good to be prepared for what may come your way and get your cibil score up.