Key Factors That Do Not Impact CIBIL Score

One of the most crucial elements affecting your financial security is your CIBIL score. Because it shows your history of repayment and is reported to CIBIL, where your whole credit history is recorded, lenders take it into account when approving you for a loan or credit card. Your CIBIL score is determined by a variety of factors, including the consistency with which you pay your credit bills and loan EMIs, as well as your credit utilisation rate.

There are, however, a lot of myths about what factors into your credit score and what doesn't. It is crucial to take care of the variables that do determine your creditworthiness. There have been claims that your CIBIL score is influenced by variables like your salary, bank balance, payment history, bounced payment cheques, and credit utilisation ratio. So, which among these does not affect CIBIL score? Let’s see.

Factors That Do Not Impact CIBIL SCORE

Many people have worked extremely hard to maintain their CIBIL score while ignoring the crucial aspects that actually affect their financial security because they have fallen prey to such incorrect beliefs and myths about the criteria that determine their CIBIL score. Because of this, it is essential to base your decisions entirely on the truth and boost your CIBIL score accordingly.

Bounced cheques: It's a prevalent misperception that your CIBIL score will be negatively impacted by a "bounced" or "stop payment" cheque. As far as the facts are concerned, when your CIBIL score is determined, these events are not even taken into account. Only when you make a late payment after your cheque bounces will your credit score be impacted.

The following factors do not impact the CIBIL score:

Your bank balance: Your CIBIL score is unaffected by the balance in your bank account. Your credit score won't be impacted by how much money you have in the bank or in your investment portfolio. Additionally, an inactive savings account with a negative or zero bank balance has no impact either.

Bounced cheques: It's a prevalent misperception that your CIBIL score will be negatively impacted by a "bounced" or "stop payment" cheque. As far as the facts are concerned, when your CIBIL score is determined, these events are not even taken into account. Only when you make a late payment after your cheque bounces will your credit score be impacted.

Change in income: Your income is a crucial factor in determining your CIBIL score. Many lenders consider your income to understand your loan repayment capability and stability of financial inflow. However, CIBIL scores are only concerned about your credit habits. Any marginal changes in your income, unless affecting your credit habits, will not affect your credit score.

Frequently checking credit score: Does checking CIBIL score affect your CIBIL score? You are free to check your CIBIL score as often as you like. It is suggested that you monitor your CIBIL score every three months. It is best to check your CIBIL score appropriately because financial institutions typically update the CIBIL records at the end of FY and H1.

Debit card transactions: Your credit score is unaffected by using your debit card to make payments because it is not a credit product and you are spending your own money. Only when you use your credit card to make purchases and are unable to pay back the charges later does your score suffer.

Paying minimum due: Does paying minimum due affect CIBIL score? If you have the habit of paying only the bare minimum charges required to keep your debt repaying sustained, then your credit utilisation will rise. As soon as this ratio crosses a 30% mark, you will have to be prepared for a drastic cut down in CIBIL score.

Conclusion

Your creditworthiness is significantly determined by your CIBIL score. Even though these factors do not seriously impact your credit score overall, it is nevertheless crucial to actively manage and enhance it. While your bank balance and salary do not directly affect your CIBIL score, it is still crucial to work toward and maintain a solid financial foundation because these aspects will be taken into account when you need to apply for a new loan. Additionally, if you have a healthy bank balance, avoid spending money on frivolous luxuries to avoid having to struggle when you’re needed to pay off credit card debt and loan EMIs in the future.

If you’re looking for a home loan and have a healthy CIBIL score of above 700, then apply at SMFG Grihashakti today. With quick, instant loan approvals and minimal processing fees and time, you can enjoy financial security with ease. Take a home loan up to INR 5 crore* at low interest rates starting from only 9.5%* for salaried individuals and 10.5%* for self-employed candidates. You can also calculate your EMI during the loan tenure and upload the documents online to get the process started!