WHO KILLED MY CREDIT SCORE? – This latest murder-mystery by Agatha Christie will have you spell-bound as Hercule Poirot takes on CIBIL to unravel how one man’s poor credit score led to murder and identity theft as part of an intricate bank loan scam.
Ok, so credit scores aren’t exactly Agatha Christie material. But if it were, when it came to the perplexing case of what’s killing your CIBIL score, Hercule Poirot would most likely doff his hat at you and be on his way. For there’s always only one true perpetrator of this not-so-heinous misdemeanour – you!
Knowingly or unknowingly, we are all guilty of killing our credit scores. Not in a single foul swoop, or swipe, of our credit cards, or burying our loan papers alive, but in more unassuming, drawn out ways. In fact, you probably think you’re in the clear until you come face to face with India’s credit watchdog, CIBIL, and its network of whips viz. bank loan officers.
Major factors that affect your CIBIL score
Credit scores that range below 300 are considered bad, and those that range between 300 and 700 are not as favorable as those above 700.
A bad credit score and rejection go hand in hand; the pain of which is felt most keenly when you’re denied a credit card or loan. If you’re one of those people with a score below 700, you’re probably asking yourself how your credit rating failed so badly? Fortunately, and unfortunately, your credit history has been recorded in the form of a CIBIL report. This includes every wrongful doing when it comes to how you manage personal credit.
With the help of your credit report, we analyse the bloody trail of evidence that places you at the scene of your ‘credit crime’.
- Unpaid Credit Card Bills: This is more than obvious, but it is indeed one of the most common mistakes people make. Whether due to oversight or poor money management, if you fell back on or missed bill payments, your credit score would have taken a bad beating.
- Unpaid Non-Credit Bills: A widespread misconception is that credit histories only include credit card and loan payments. However, don’t be surprised if you find your unpaid utility bills, e.g. electricity or telephone bills, featuring adversely on your credit report.
- Paying the Minimum Due: This is probably a major factor that caused your credit score to fall. Paying the minimum bill amount on your credit card may have relieved you for the month, but the compound interest charged on the outstanding balance would have then snowballed into a world of worry on your credit report.
- Mismanaged credit: Sometimes, with great credit power comes great irresponsibility. You read it right. Going over your credit limit is thrilling when no one’s watching. All those times you thought you covered your tracks didn’t go unnoticed. Neither did the fact that you didn’t make all your loan payments on time. Too much credit and over usage of it is a red mark on your report.
- Rejected credit applications: You, like almost every patsy out there, may have fallen for enticing promotional offers – low interest rates, freebies etc., and applied for a new credit card or loan only to find out you weren’t eligible and your application was rejected. Or, if you applied at multiple places as you decided to hunt for bargains, every rejection was a nail in your credit coffin.
- Consolidating debt: Getting rid of the murder weapon? Rookie mistake when CIBIL is involved. Closing a credit card or settling a loan seems like the easiest way to get rid of bad debts. But contrary to reflecting your intention to gain financial control, this actually reads as a lack of confidence, adversely affecting your creditworthiness.
- Going off the credit tracks: Whether you run your own enterprise or are a salaried individual, it is always necessary to maintain your credit score. However, most people are not even aware of their CIBIL score. You probably didn’t even check yours until it was too late. By not tracking what was happening to your CIBIL report, you lost out on opportunities to contain any hiccups you caused along the way.
Retribution
Once found guilty of beating the life out of your credit score, you’re left with two options. Serve a long sentence as a credit pariah or plea bargain your way out of it. Go with the latter and work on improving your credit scores. Until you do get your scores up to scratch, know that you can work out a deal with credit providers as there are ways to avail loans and credit cards with a bad credit score as well. Soon, you’ll have a clean record and rejoin the ranks of the creditworthy. And if, in a couple of years, you still haven’t figured it out, there’s always Hercule Poirot.