We frequently overlook other significant variables or financial decisions that can affect our credit score because it is widely believed that your credit payback history has the greatest affect on your credit score when you check my credit score.
According to the credit bureau of India, there are six things you can do with your money that could lower your credit score for home loan even if you repay your loan EMIs and credit card bills on time and on a regular basis:
Failure to keep the credit usage rate under 30%
This ratio demonstrates how much portion of your total credit limit is still free vs the balance on your credit card. Credit bureaus typically reduce your credit score by a few points if you exceed this limit since a credit utilisation ratio of more than 30% is frequently interpreted by lenders as an indication of “credit appetite.”
Therefore, it is advised that you use no more than 30% of the total credit card spending limit. If you frequently spend more than this figure, you might wish to apply for a second credit card or ask your card issuer to increase your credit limit. As long as you don’t use your card more because your credit limit increased, doing this will increase your overall credit limit, which will reduce your credit utilisation ratio. By making sure to check my credit score each month after beginning this habit, you can witness the improvement in your credit score.
Multiple credit applications sent to lenders in a short period of time
The lender will obtain your credit report from the credit bureau of India if you apply for a loan or credit card and use it to determine whether you are a good credit risk. “Hard inquiries,” which are credit report checks requested by a lender, typically result in a few points being deducted from your credit score for home loan.
Additionally, asking numerous lenders directly regarding your credit score in a short period of time may cause your credit score to decline more quickly, which is reflected when you check my credit score. This may make it more difficult for you to obtain credit or a loan in the future. Reduce his credit score quickly.
You might use online portals to identify the best credit choice and lender for you based on your existing credit score, monthly income, and other relevant factors rather than speaking with many lenders personally about your credit. Although such online finance related marketplaces also fetch and review your credit report, the credit bureaus refer to these inquiries as “soft inquiries,” and as a result, they have no impact on your CIBIL score for home loan.
In the credit mix, unsecured loans are more in ratio.
Your debt mix refers to how much of it is secured and how much is unsecured. Because lenders frequently favour borrowers with a higher percentage of secured loans, such as housing loans, loans backed by property, and car loans, the Indian credit bureau likewise rates these types of borrowers more favourably in their credit reports. Even if they wish to see an improvement when they check my credit score, individuals who have a lot of unsecured debt, such as personal loans, loans secured by credit cards, and so on, should aim to keep their debt-to-credit ratio higher. You can achieve this by taking out a gold loan, a loan against stocks, or some other type of loan. You can also do this by paying off your unsecured loans early or replacing them with secured loans, such as a top-up home loan if you already have a home loan.
Not monitoring the payment on a loan for which you co-signed or provided a guarantee
The guaranteed and co-signed loan accounts are also mentioned in your credit score for home loan as well as report. Simply put, putting your name on a loan or co-signing for one is a major obligation, much like having a second credit card. You and the co-signer or guarantor are jointly responsible for seeing that the loan is repaid on schedule. Your credit score would be affected in the same way whether you paid the obligation on time or not at all. To prevent your credit score from being negatively impacted by the primary borrower’s poor financial decisions, keep a close eye on the repayments of any loans you co-signed or guaranteed on a regular basis to ensure that payments are made on time.
Inaccuracies in a credit report
Lenders and credit card firms have provided information about your credit history to credit bureaus. This data is used by the Indian credit bureau to calculate your credit score. If your lender or credit bureau makes a mistake, provides you with inaccurate information, or worse, commits fraud, your credit score for home loan may suffer. As a result, it is crucial to often check my credit score, preferably at least once each month. Finding any discrepancies and reporting them as soon as possible to the credit bureau and lender will assist the matter be resolved as quickly as possible. Every consumer has a limited time, once a year, to request at least one free credit report from each of the four credit bureaus. Instead, internet financial marketplaces offer their clients free credit reports and monthly updates on them.
Discarding old credit cards
The average length of your credit history is one of the key factors that the Indian credit bureau considers when calculating your credit score. The age of your credit history is another name for this. Keep using your older credit cards to maintain a constant length of credit history. This is crucial since creditors favour borrowers with a longer average credit history. Your credit history should be as old or typical in age as possible. . Your total credit limit decreases along with the average age of your credit history when you close an older credit card. This lowers your credit score for home loan by increasing your credit use ratio.