He busts the myths around factors that do not affect credit scores and highlights the right way to handle credit responsibly.
What are the most important factors that impact credit scores?
A credit score reflects how responsibly a person manages credit. The three key factors that can impact your score are:
Foremost, not paying bills on time. Making late payments or defaulting on your EMIs has a negative impact on your credit records. Second, building up due balances. When a person takes on more credit without reducing existing debt, it shows higher financial pressure. Using credit judiciously while paying back debt helps maintain stability.
Third would be applying for multiple credit products at once. A balanced mix of secured and unsecured loans and a longer, well-managed credit history reflect financial maturity. However, applying for and availing several new loan products all at once in a short period can signal over-borrowing.
Also, as opposed to popular belief, checking your own CIBIL Score through the CIBIL website or affiliate partners is safe and does not affect the score.
When people repay on time, use credit judiciously and apply for new credit only for what they need, their CIBIL Score remains healthy and strengthens over time.
What’s the impact of even a single late payment and how can one recover the credit score affected by it?
Lenders view missed or failed credit payments as a sign of irregular repayment behaviour and the same is reported to CIBIL, which in turn will have an impact on your credit score. The delayed payment also attracts daily compounding interest and late fees, which increase your outstanding balance and make future repayments harder.
Credit score improves when payments are made on time. Regular, full payments rebuild the record of discipline that lenders look for. Over time, the score reflects this consistency and moves back towards a healthy range.
What is the impact of hard enquiries? What counts as too many hard enquiries in a short period?
Each time a person applies for a new loan or credit card, the lender checks their credit profile. This is called a hard enquiry. It helps the lender understand repayment behaviour before approving credit.
A few enquiries spread over time are considered normal and usually are not a cause of concern. But too many hard enquiries and subsequent loans availed within a short span can make lenders view the person as seeking too much credit at once. This may impact the CIBIL Score and affect how future applications are assessed.
A long and well-managed credit history helps balance this effect. When a person has shown consistent repayment discipline over several years, lenders see them as reliable, even if a few new enquiries appear.
Checking your own CIBIL Score is a soft enquiry and does not affect the score in any way. Monitoring one’s score regularly is a good habit that helps people stay financially aware and responsible.
Do several credit cards and multiple loans in one’s name impact credit score?
Having several credit cards or loans does not by itself lower a person’s CIBIL Score. What matters is how each account is managed. A mix of secured loans, like a home or vehicle loan, and unsecured loans, like credit cards or personal loans, helps show that the person can handle different kinds of credit responsibly.
The score is affected when payments are delayed or when most of the available credit is used at all times. Using credit judiciously and keeping credit utilization moderate shows financial control.
Lenders look for consistent repayment and balanced borrowing. When people borrow within their means, pay on time and keep their balances under control, their CIBIL Score remains healthy and continues to grow.
There have been growing instances of phantom loans appearing on credit reports. What is the right process to report these?
If a loan or account that you never took appears on your CIBIL Report, it is important to act quickly. Such entries may result from reporting errors or misuse of personal details.
A consumer can raise a dispute through the official TransUnion CIBIL website, by email, or through the contact centre. Once the dispute is raised, TransUnion CIBIL forwards the request to the respective credit institution for verification. If the institution confirms the discrepancy, the information is corrected in the credit report.
As per Reserve Bank of India guidelines, this process is completed within 30 days. The service is free of cost. Once the data is corrected, the CIBIL Score adjusts automatically in the next reporting cycle.
Consumers are encouraged to check their credit reports regularly. TransUnion CIBIL provides a Free Annual Credit Report, which can be accessed online after a simple authentication process.
How many times in a year can a consumer see their CIBIL report for free? What are the charges when the free period is over?
Every individual is entitled to one free CIBIL Score and Report each calendar year, as per RBI guidelines… In addition, TransUnion CIBIL has partnerships with leading fintech and payment platforms that allow consumers to check their CIBIL Score for free at any time. This helps people stay aware of their credit standing and track their progress through trusted digital partners.
Beyond the free annual report, consumers can also choose from paid subscription plans that offer regular score updates, alerts and insights to help monitor their credit health more closely.
Checking your credit report regularly builds awareness and confidence. It ensures that your credit information remains accurate and helps you make informed financial decisions.
