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Key Factors that does not affect CIBIL Score

You must be thinking that a good credit score makes your financial credibility rise like a hot balloon, and we would like to tell you that you are thinking in the right manner. Apart from low-interest rates on loan and easy mortgages approvals, a good CIBIL score provides you with various other benefits. But it is not so easy to avail all these benefits as the CIBIL score of any individual is highly prone to getting affected by various factors. Additionally, you have to play very smartly to fetch a good CIBIL score.

In order to upkeep with all these factors, an individual drains out most of his resources. In the absence of proper information, people start paying attention to anything and everything related to CIBIL when aiming for a high CIBIL score. The situation gets worse when an individual focuses on more over those factors, which do not even play any role in your CIBIL score and overlook the essential one. The end-result is a low CIBIL score and high frustration level, as the individual thinks that he has made so many efforts which yield-out no results.

That is why proper information is an absolute necessity when you aim high for good CIBIL score. The Internet is flooded with various posts about the factors that affect your CIBIL score but no one tells you about the factors which have no significant role in your CIBIL score. Well, if you are also looking for one such post, then your search will end here.

Factors that don’t affect your CIBIL score

Your investment schemes and account balance- Though CIBIL score gets affected by your loan availed, it is entirely dependent on your savings and investment plans. Your CIR only comprises of details related to your loan and credit card balance. It has nothing to do with how many policies you have purchased or how many FD’s you have or what is the amount present in your account. So, if you are thinking that taking so many policies will affect your CIBIL score, then it’s time to change your conception.

What actually affects- Taking so many investment policies does not affect your CIBIL score, but having so many credit cards might have effects. When an individual has many credit cards with him/her, they often increase credit burden over him and fails to make the payment on time. This leads to card settlement in some cases. A card settlement is a thing which affects your CIBIL big time. So, buy a credit card intelligently.

Bounced or stop payment cheques – Majority of people think that a bounced or ‘stop payment’ cheque will have a negative impact on your CIBIL score. But the reality is far-flung as they have no impact on your CIBIL score. They even don’t get consideration when the company calculates your CIBIL score. Though it is true that every delayed or bounced payment get directly reported to the CIBIL, it doesn’t affect your CIBIL score. Your bounced cheques are not a part of your credit report and thus, they have almost near-to-zero impact on your CIBIL score, unless the cheque is not related to any loan installment or repayment.

What actually affects- A bounced cheque that was actually a loan repayment or any EMI affects your CIBIL score negatively as it indicates that you have missed one of your repayments. CIBIL keeps a track on all your loan repayments and seeks timely payoff. If due to any reason including cheque bounce, it gets delayed, then it will hamper your CIBIL score.

Accounts that are not operative or more saving accounts- We all have minimum two bank accounts for the sake of our convenience. Sometimes the number exceeds as well. If you have an inoperative bank account with negative balance, then it is not going to affect your CIBIL score in any way. CIBIL does not keep a track of the number of saving operative accounts and negative balances. So, it has no role in deciding your CIBIL score. However, one should close all its inoperative accounts from their financial perspectives.

What actually affects- Though the number of savings accounts doesn’t affect your CIBIL score, number of loans availed actually affects it, as many loans indicates that you have a high debt burden over you.

Transactions made by debit card- Your CIBIL score is independent of the amount spent from your debit card and transactions done through it, as it only records your credit card activities. You can spend as much as you want with your debit card. Your debit card activities are entirely free from debit card activities.

What actually affects – The number of transaction and maximum limit spent by your credit card actually matters. If you are spending more than your credit limit and seeking credit from your card provider again and again, then it will affect your CIBIL score in a negative manner.

Checking your CIBIL score again and again- It is a common conception that checking your credit score again and again might hamper your CIBIL score. However, it is not true at all. Ideally, one should check his/her CIBIL score once in three months. But, it is not at all harmful if you check it in once in two months as well. In most of the cases, banks update the CIBIL score of the customers at the end of the final year and H1. So, it is advisable to check it in Jan and July for the right update. The best way is to check it online as banks do not keep the records of online CIBIL check. What actually affects- Checking CIBIL score via in-person or on-the-paper gets recorded by the bank which might hamper your CIBIL score, if you’ve asked it frequently.

Your postponed utility bills- If you have any due utility bills like electricity, house tax, and mobile phone bills, then it is not going to affect your CIBIL score. But, it is definitely going to hamper your other personal factors. Because being a defaulter is not at all a good thing.

What actually affects- Missing your loan installment or credit card payment will surely affect your CIBIL score as it will confirm the fact that you are not so regular in your credit payments. When you miss your loan payments, it shows a negative growth in your CIR.

Your change in income- Your CIBIL score will not get affected with your income change. It is a very common conception that the CIBIL records activities like how much they are earning, where they are spending and so on. However, the reality is far-flung. CIBIL is only concerned about your credit status. Nothing else matters for it. However, change in income might affect your spending capacity. For instance, if you were earlier earning six-figure salary, then you must be spend in accordance with that only. Sudden hike or drop in the income will ultimately affect your spending capacity.

What actually affects- Though the change in income doesn’t affects your CIBIL score, change in spending habits might affect your CIBIL score, as if you continue spending like before even after experiencing a salary dip, then you might be due with credit repayments. So, it is always suggested to have spending habits like your income cycle. If your income has reduced than before, reduce your number of transactions made by the credit cards as well.

Your demographics- It is true that your credit reports contain a part of your personal information like name and age; it is entirely independent of your current demographic situation. Change in address, change in marital status, education level, religion, and various other factors do not affect your CIBIL score. The information that CIBIL gathers is limited to name, contact, residential address, and birthdate only. Even change in these factors also doesn’t hamper your CIBIL score.

What actually affects- Your CIBIL score will be affected by the change in credit status. A “settled” status is likely to have a negative impact on your CIBIL score. However, “closed” status has a far positive impact. Try to transfer your “settled” to the “closed” one and take the delight of a high CIBIL score.

Being denied to credit- If you have ever been a rejection for a loan application or credit card application, then you must be thinking that it will affect your credit score as well. Let us clarify the confusion. Saying no to credit doesn’t affect your CIBIL score as your CIR never showed the status of the application applied for a loan or credit card. You need not worry about any application rejection as such. However, this denial might trigger a hard inquiry on you by the bank. Still, it is not going to have major consequences by all means.

What actually matters- Being denied the loan and credit cards does not affect your CIBIL score, but being denied to give a “Closed” deal might affect it. Closed status of any cardholder signifies that the cardholder doesn’t have any dues pending and gets a clean chit from the bank. If the bank denies to give you a “Closed” status then you have to be satisfied with “Settled” status, which has a negative impact on your CIBIL score.