The following are the main factors affecting the CIBIL score:

Repayment History   

This is a main factor that directly affects your CIBIL score. Every time a person avails credit or a loan, the lender is bound by duty to report the same to the CIBIL. The bank takes note of whether an individual repay their debts on time. If an individual makes an effort to repay in advance, it is considered as a positive sign. This indicates that the person can be trusted to repay the amount he owes.

Drastic Increase in Credit

Every earning individual would have a certain credit limit, whether for a loan or a credit card. However, utilising the available credit in its entirety would come off as credit which is seen as a red flag by banks. If an individual maintains their certain credit level for all the months but is seen spending significantly more financially, it may result in a dip in the score.

Debt to Income Ratio (DTI)

Typically, lenders do not encourage people to take more debts than roughly 40 per cent of their total income. So, DTI is a measure that is used to estimate the ability of a loan applicant to repay their debts based on their salaries. DTI is considered to be a useful metric to inculcate financial discipline in one’s self so that one would be able to repay one’s future EMIs without any trouble.

Multiple Loans

It is also a concern to banking authorities when an individual has many loans such as home loans, personal and vehicle loans and various credit cards registered in their name. It is always a good sign to close one before moving on to avail another one.

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