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A CIBIL
credit score is a three digit number that acts like a summary for
your credit history and credit rating. This ranges from 300 to 900
with 900 being the best credit score you can get. The closer you
are to 900, the better are your chances of getting approved for a
loan.
If you don't have a credit history, you will have a credit score of -1. If you have a credit history of less than six months, your credit score will be 0. Credit scores take time to build up and usually it takes between 18 and 36 months of credit usage before you get a decent credit score.
Factors that will reduce/affect my credit score:
1. Late/missing payments
Every time you miss a payment on a loan or are late in paying it by more than 90days, an entry is added to your credit report and stays there for seven years. This proves that you are not able to handle existing debt obligations.
2. Increased spending on credit cards
An increase in spending on credit cards indicates that you are not able to meet cash obligations and puts pressure on you for repayments in the future. While some amount of spending on credit cards is good, too much could be bad.
3. Large amounts of unsecured loans
Credit cards and personal loans are unsecured loans. While they are the easiest to obtain, they are also the ones that have the highest rates of interests. The larger the amount of unsecured loans, the larger is the payment you have to make.
4. Credit Hungry behaviour
If you have made a lot of applications for loans, lenders will look at you with caution. This behaviour shows that you are suddenly taking on too much debt and may not be able to repay them on time.
MadanMadan Mohan is your banker turned counsellor. Having spent more than three decades in the banking industry, Madan took up the role of Chief Counsellor at ICICI Bank promoted, Disha Financial Counselling Centre. During his five year tenure, he helped distressed customers come out debt trap and helped others from falling into one.
Follow Madan on Google+ Email Madan© 2012 CreditVidya.com.
All rights reserved. Disclaimer: This information has been compiled and provided by CreditVidya.com as a service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.
