Credit Score: Is your Cibil score falling even after paying credit card bills on time? These could be the reasons

Not paying your credit bill on time or missing it completely may not be the only reason for your falling Cibil score. It can also go down when you pay your credit card bill in full and on time.

If, for some reason, the bank has reduced your credit card limit, your credit utilisation ratio will also be reduced, which will spoil your credit score. Photo: FIle/Representational

Credit Score: If you use a credit card and pay your bill on time, you may have reasons to be content that you are maintaining a healthy Cibil score. But you may be wrong. Your Cibil score can go down even after paying the full credit card bill without missing the payment deadline. ZeeBiz will tell you the reason why your Cibil score can slide.

1. You didn't maintain healthy credit utilisation ratio

Credit utilisation ratio is the percentage limit you use from the total limit of your credit card. It is also taken into account when calculating your credit score. A 30 per cent credit utilisation ratio is considered good. While taking a credit card, keep your credit limit lower than your monthly salary. Because if you use your credit card to purchase things that are costlier than your monthly salary, the ratio between your income and credit decreases, which hits your credit rating.

2. Multiple cards or loans

If you apply for many credit cards or loans despite rejection in a shorter period of time, banks will conduct multiple hard inquiries to check your credentials. Repeated hard inquiries can dent your Cibil score and severely reduce your chances of getting a credit card or fresh loan.

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3. Credit limit reduced

The credit limit is also considered when determining your Cibil score. If, for some reason, the bank has reduced your credit card limit, your credit utilisation ratio will also be reduced, which will spoil your credit score.

4. Have taken a joint loan

If you take a joint loan, it is also visible in the credit reports of both borrowers. But if any of the borrowers is unable to repay the installment for any reason, then the missed payment appears in your report and affects your Cibil score.

5. You have closed a credit card

The credit utilisation ratio takes a hit when you close any of your credit cards. When you close a card, your credit utilisation ratio decreases, which affects your credit score.

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