Many people believe that paying EMIs on time is enough to keep their credit score high. While timely payments are important, your CIBIL or credit score depends on several other factors. Making certain mistakes can still cause your score to fall, even if you never miss an EMI.
1. High Credit Utilization
· What it is: Using a large portion of your available credit limit on credit cards.
· Why it hurts: Credit bureaus prefer a utilization below 30–40%. High usage signals higher credit risk.
· Tip: Pay off credit card balances before the due date and try not to max out your cards.
2. Applying for Too Many Loans or Credit Cards
· Every loan or credit card application generates a hard inquiry on your credit report.
· Too many inquiries in a short period make lenders think you are desperate for credit, which can lower your score.
· Tip: Only apply for credit when necessary and space out applications.
3. Closing Old Credit Accounts
· Mistake: Closing old credit cards or loans after paying them off.
· Why it hurts: The length of credit history impacts your credit score. Shorter history can reduce your score.
· Tip: Keep old accounts active (even with minimal use) to maintain a long credit history.
4. Not Maintaining a Healthy Mix of Credit
· Credit bureaus prefer borrowers who manage different types of credit:
o home loans
o Personal loans
o Credit cards
· Only having one type of credit may limit score improvement.
· Tip: Over time, maintain a balanced credit mix responsibly.
5. Ignoring Errors on Your Credit Report
· Sometimes, errors like duplicate loans, wrong EMI defaults, or outdated info can reduce your score.
· Tip: Check your credit report at least once a year on CIBIL, Experian, or Equifax. Dispute inaccuracies immediately.
Additional Tips
· Pay all bills on time, not just EMIs (utilities, phone bills, etc.).
· Set up auto-pay reminders to avoid accidental late payments.
· Monitor your credit score regularly to catch issues early.
Conclusion:
Paying EMIs on time is important, but it’s not the only factor affecting your credit score. Avoid these five common mistakes—high credit utilization, frequent applications, closing old accounts, poor credit mix, and ignoring errors—to ensure your score improves steadily.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.
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