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Whenever an individual checks their CIBIL Score, it creates a level of anxiety in the minds of individuals. There are various reasons that lower your credit score. But if you find out that your credit score is high, despite defaulting a couple of times, then the main reason for this would be some unique and scientific methodologies that have been adopted by CIBIL to calculate your score. Here are few common mistakes that people make because of lesser knowledge of what goes into a credit score. Avoiding these mistakes will certainly help an individual to improve their credit score.
Creditseva guides the individuals in such a manner that they tend to learn from their past mistakes and provides them with a set of precautionary measures and steps that are to be followed so that a good CIBIL Score can be maintained.
1. Closing A Very Old Credit Card Account: If you close your oldest credit card, it is going to affect your credit score in an extremely negative manner. So it is better to avoid doing such a blunder.
2. Paying minimum amount as due: Do not make the mistake of paying the minimum of the amount that is due. If you are making minimum payments, you will have to pay a large amount of money at a later stage.
3. Using Credit Cards with Higher Limits: It is always better to avoid using the credit cards with higher limits, because this facility makes an individual spend more than his credibility to pay back.
4. Extending Loan Tenure for Lower Payments: If you extend your loan tenure, you end up paying more. Avoiding this situation will help you in saving money.
5. Not checking your CIBIL report: It is important to keep checking your credit report at least once a year. If you have not been doing this, then you need to start doing this as soon as possible.
6. Not reading the fine print carefully: If you are not careful enough while reading the fine print of the introductory offers, then you will end up reducing your credit score.
7. Opting for a Credit Card only for the benefit of rewards: The benefit of rewards is only when you do not have any balance on the credit card. Alternatively, if the balance increases, the interest will outweigh the benefit of rewards.
8. Having only one form of credit: To improve your credit score, you can take credit using credit cards and different types of loans rather than sticking to one particular form of credit.
9. Regular Bouncing of Cheques: The regular bouncing off your checks will lead to lowering your credit score. So you should avoid getting into trouble and make sure that your cheques do not bounce.
10. Opting for “Settlement” Rather Than Properly Closing an Account: If you have opted for settling of a loan and not closing it, your credit score will get impacted in a negative way. If you have settled your loan account, there are chances that your new loan applications will get rejected.
11. Not Disputing Inaccurate Items on Your CIBIL Report: If you do not try to correct the inaccurate items on your credit report, it will lead to lowering your credit score. So it is always better to dispute the inaccurate items like the double listing of a loan account on your report and no updating of your latest credit related data etc.
12. Behaving Credit Hungry: You will certainly see that your credit score will come down if you are behaving in a credit hungry manner. Therefore you need to be more careful with your credit behaviour if you are willing to maintain a good CIBIL Score.
13. Frequent Balance Transfers: If you do not want your credit score to come down, you should not go for transferring the balance at regular intervals. If you transfer balance regularly, you will have a large number of open lines of credit and more number of accounts that are active; this will impact your credit score negatively.
14. Requesting for an increase in credit limit: It is better not to request for an increase in your credit limit because this will reduce your credit score. Requesting for an increase in the credit limit is a hard inquiry and hard inquiries are known to reduce the credit score.
15. Defaulting a Loan: This is perhaps the worst thing that is done by a borrower. Whenever a borrower defaults a loan, it immensely affects the credit score. If you have defaulted on your loan once, you will be blacklisted by the lender and this leaves negative remarks on your credit report.
The above-mentioned mistakes are bound to happen by any individual. These mistakes help the individuals in learning a lesson in future and not repeat the same mistakes thereafter. Preferably the mistakes that damage your credit score should be avoided. Lastly, an individual needs to go with their common sense while monitoring your financial life and cultivating good financial habits along with awareness of credit scores. This will help you in building a good credit history and a good credit score.
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