How CIBIL score is determined, how much it affects your loan and credit card, know

HIGHLIGHTS: A 30/25/20 formula is necessary to improve credit score. Late bill payment is also considered in determining credit score.

Credit or CIBIL score is very important for taking a loan. Companies ask you about this while giving a loan. If your score is good, then you get a loan easily. Therefore it is important to keep credit score fine. Credit score varies due to many reasons, such as late payment of bill, more credit card application, increasing credit limit. A 30/25/20 formula is necessary to improve credit score. Know how it affects your credit score.

If there is a late bill payment

Late bill payment is very effective in determining the credit score. Late payment of credit card bill or debt affects the credit score by 30 percent. So you must have understood how important it is to pay bills and loan installments on time to keep the credit score correct.

Contribution of raising the limit

The credit score has an effect on increasing the credit card limit. If you increase the limit for a credit card, then it contributes 25 percent to determine its credit score. Initially, companies issue credit cards with low credit limits. Later your limit increases if your CIBIL score is good.

More than one Loan and Credit Card 

If you use more credit cards, then your credit report can have a bad effect on it. Explain that when you apply for a credit card, it appears in the Inquiry section of the credit report. So if you have many credit card applications and loans can affect your credit score. If you have made many applications for credit cards and loans, then this can affect your credit score by 25 percent.

What is CIBIL score or Credit Score?

The CIBIL score is determined by three digits. This shows whether the loan you have taken has been paid on time or not, besides whether you have paid the entire interest. You have filled all the amounts in one go or paid the minimum amount. All these information are in the CIBIL score.

Source: Web