Most lenders and card issuers analyse your CIBIL score at the time of loan or credit card application submission. Low CIBIL score may result in loan application denial or dim chances of approval with high interest rates and annual fees. CIBIL score ranges between 300-900, wherein a credit score above 750 shall help in getting your credit card or loan application approved. However, if your CIBIL score is 650 or less, it is less likely that your new credit application shall get approved.
If you have not handled your credit responsibly in the past, there are high chances that your credit score would be low which means you have low creditworthiness and in turn, most preferred lenders or credit card issuers would not approve your credit application. However, if you know the reasons for having a low CIBIL score, you can follow some best practices to improve it.
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Read on to know these measures to rebuild and improve your CIBIL score.
Top 5 Reasons for your Low CIBIL Score
If you have a low CIBIL score, there are chances that you might have, knowingly or unknowingly followed some of the below mentioned practices. To avoid any further dip in your credit score, check out these reasons and avoid using while utilizing your existing or new credit.
1) Delayed/Non-payment of Credit Dues
- Your payment history is one of the key factors that affect your CIBIL score. If you have repeatedly delayed or missed your EMI/credit card payments in the past, your score will decrease drastically
- If your credit report displays DPD (Days Past Due) with numbers that means you have defaulted on payments that shall lead to fall in your credit score
- Unpaid dues of small amounts for longer duration lowers your CIBIL score drastically
Suggested Read: How Credit Cards Impact your Credit Score?
2) Simultaneously Multiple Credit Applications
- Submitting multiple applications for new loans and credit cards with several lenders within a short time results in an increase in the number of hard enquiries that eventually leads to decreased credit score
- All of these hard enquiries get recorded on your CIBIL report and depicts your credit hungry behaviour which is potentially at a higher risk of default. As a result, your CIBIL score is likely to diminish
- Simple rejection of your credit application (loan or credit card) also decreases your CIBIL score significantly