Factors that punch your civil score

Are you new to the world of credits, civil scores and reports? Don’t worry, as this world of scores and reports and the constant effort to keep them clean can indeed be mind-boggling.

Civil scores are the first thing that any lender checks to approve your loan. Civil scores can be termed as a measuring meter that assesses your borrowing capacity and predicts if you are likely to default on your secured and unsecured trade lines. In other words, a healthy civil score helps you – the potential borrower – to identify the risk areas, manage them efficiently, minimise losses and increase profitability. 

Several slips could affect your scores, but before we get on to them, let’s understand why these 3-digit figures, ranging between 300 and 900, are crucial when applying for a loan. A healthy score, which is over 700, helps lenders evaluate your application and scan your Credit Information Report (CIR) to determine your eligibility. A score closer to 900 fetches you better deals on credit cards and loans.

To build a good score it is vital to know the factors that affect it. Log on to https://civilscores.com for more information on factors that affect your scores and the remedies to its negative impact. 

• Repayment history: Your repayment history bears 30% of your civil score. Being irregular with paying off your loan instalments or credit card payments confirms that you are not a religious payer. Thirty-day delinquency reduces your score by 100 points. On the other hand, you are rewarded with a better score if you pay your bills on time. 
• No credit mix: Personal loans and credits are unsecured loans while a secured loan includes a home loan or an auto loan. But if you maintain a balance of both secured and unsecured loan it could reflect positively on your scores.
• High utilisation of credit limit: Experts warn against exceeding using 30% of your credit limit. Having a high credit exposure, which bears 25%, of your civil score, marks a red flag on your credit report indicating you are at a high-risk defaulter. 
• Multiple accounts: If you are one of those who frequently take loans, your creditworthiness is decreased and your repaying ability is considered risky by lenders. Also, when you apply for multiple applications, it requires a hard inquiry by the lending companies. This again tarnishes your civil score.  
• Errors in your report: Your civil report contains a detailed account of your current and past credit dealings. Any discrepancies in the report could hamper your score. Hence, they must be rectified immediately. 
• Closing old accounts: When you close your old accounts, you lose the long credit history of it as well. So, consider doing away with the new cards rather than the older ones.