Hyderabad: A credit score reveals how disciplined a person is with finances. This score will act as a tool for you to get quick loans when needed. This credit score can sometimes appear to be dropping. Under what circumstances is this likely to happen and what we should do in that scenario? Take a look at the report as soon as you notice that the credit score has dropped.
Check if any new debt has been added to your account without your knowledge. Late payment of loan instalments? Make sure the credit card bill is paid in full. Sometimes one or more reasons can have a negative impact on a credit score. If you observe the report carefully you can know the reasons. Correcting them can ensure that the score does not go down again.
Late payment of instalments: Credit score goes down usually on late payment of EMIs or neglecting them for a long time. Once the EMI is not paid on time.. then the score can be corrected by paying it regularly. If you always delay.. it is impossible to increase the score. Paying on time is up to you. Failure to pay attention to this will lead to problems in the future.
Within the limit...
Credit cards should always be used within limits. Moreover, if you use more than 30 per cent of the card limit.. banks will understand that you are relying on total loans. So, don't use more than 30 per cent of your credit card limit. If 90 per cent is used there will be an effect on the score. If you feel that your credit card score is low due to excessive credit card use, immediately ensure that the card utilisation ratio is below 30 per cent. So that the score will improve gradually.
Take a single loan instead of multiple
If the number of debts is high, the credit score will decrease. Similarly, the debt amount may be small if you take loans from more bans or financial institutions that will reduce your credit score. At the same time, some people always look for loans in banks, apps and NBFCs. Such factors are visible in their credit report. So, it is always better to settle small debts and keep one big debt and should not approach anyone for unnecessary loans.
Cyber frauds
Cancelling a credit card that has been in use for many years will temporarily affect the score. This can be due to your reduced creditworthiness and the lack of old card details in your credit history. So, do not cancel your first credit card. Meanwhile, cyber fraudsters taking loans using PAN and Aadhaar cards are also increasing. So, if you want to know if any such fraud has taken place, check your credit report regularly. If you find unrelated debts, you should immediately bring them to the notice of banks/loan institutions. Then the credit bureaus will correct them. As a result, the score will improve, says Adhil Shetty, CEO, Bankbazaar
