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5 Things Which Leads to Down Your Credit Score


Your credit score is one of the most significant factors when it comes to money lending. Based on this score, lending institutions decide whether to give you a loan or a credit card. Therefore, you must never take your credit score for granted. If you think only loan defaults can hamper your credit score, you are mistaken. Defaulting on credit card payments can also negatively impact your credit score.

5 Things Which Leads to Down Your Credit Score

Here are 5 ways that a credit card can pull down your credit score:

1. Applying For Several Credit Cards Frequently – Lending money is risky. To safeguard their interests and assess your creditworthiness, banks or lending institutions enquire about your credit report from bureaus, when you apply for an online credit card or loan. So, apply for credit only when you require it. In addition, avoid applying for multiple credit card from different lending institutions, since it is perceived as a sign of desperation and could further lower your credit score.

2. Maintaining High Credit Utilisation Ratio – A credit utilisation ratio is the ratio of your credit available and credit utilised. It is advisable not to use more than 30% of the credit available on your card as credit bureaus could cut back your credit score. They could regard you as a risky prospect, fearing that you may max out on your cards, and have trouble making payments in the future.

3. Not Paying Your Credit Card Bills – Credit card apps simplify making credit card payments on time and help you keep track of your due dates. Not repaying your bills on time can not only affect your credit score but also jeopardise your chances of getting credit approvals from other lenders. Also, avoid partial repayments as it gives an impression you are struggling with your finances that could lower your credit score.

4. Defaulting On An Add-on Card – Add-on cards can be extended to your parents, spouse, and children. The expenses incurred on such cards are billed to the primary cardholder. If the costs on add-on cards are not managed wisely, it can impact the credit score of the primary holder as well. It is wise to monitor the credit utilisation ratio on all cards combined to prevent your credit score from taking a beating.

5. Closing A Credit Card Account – Lenders consider profiles with short credit history riskier than those with longer histories. Closing your credit card account may seem like a good idea, but once the credit no longer appears on your credit report, it could negatively impact your credit score. You must carefully evaluate your decision to close a credit card account before acting on it.

If you do not trust yourself with a credit card and fear you may overspend, you have the option of taking a personal loan. Such a personal loan can be used for any purpose. In addition, you can manage your loan through a loan app.

Bajaj Finserv Experia App is a one-stop solution for all your investment and post-loan services at one place. It offers personal loans up to Rs.25 lakh with flexible repayment schedules ranging between 12 and 60 months. Besides, the app requires minimal documentation and ensures faster loan processing for a seamless loan application process. With its quick loan disbursal facility, you can get the money credited in your account within a few hours of approval on your loan application.

The process of availing a personal loan is simple. Bajaj Finserv has various pre-approved offers for personal loan, home loan, business loan, and other financial products. These pre-approved offers help you save time and eases the process of availing a loan, making it hassle-free and smooth.

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