Causes Of A Low Credit Score And Ways To Improve It

Cibil Score

A credit score is a three-digit number generated by TransUnion CIBIL. CIBIL is one of the four agencies in India with a license from the Reserve Bank of India to store all the credit-related transactions and data. The other three agencies include CRIS High Mark, Equifax and Experian. This three-digit number represents the individual’s credit history, which reflects the credit repayment record. You can easily view it on the Credit score app. When you apply for a loan or a credit card, the banks, NBFC, or the credit lending company depend upon your CIBIL score to process your application.

What Is A Good Credit Score?

The CIBIL score lies between 300 to 900. Any score above 750 is considered excellent, and you will receive your loan or credit card approval instantly. However, when someone has a credit score below 650, it becomes unlikely that the bank or NBFC will approve the loan request because they find the person’s previous record untrustworthy in terms of loan repayment.

The Major Reasons Of A Low Credit Score

If you have managed your credits or loan repayments effectively in the past, your CIBIL score will reflect that, and you will have a good enough score. However, if you have missed your EMI payments or mismanaged your credit history, your credit score will be lower. A few of the significant reasons for a low CIBIL score include: 

  • Irregular Loan Repayment Record: Your loan repayment record is crucial for your CIBIL score. If you have constantly missed your EMIs, it will reflect in the form of a low score. If you are a defaulter on loan, it would drastically lower your CIBIL score. You should note that even a small amount can affect your CIBIL score to a significant factor. 
  • Multiple Applications: If you have applied for a loan at various places with numerous credit institutions, this hurts your CIBIL score as all your applications get recorded on your credit report. Furthermore, rejection of any application drastically affects your CIBIL score.
  • Frequent Maxing Out: If your credit utilisation ratio is high, which means you constantly Max out your credit cards or the credit limit available on various products, it shows your dependence on credit. This reflects a high value that needs to be repaid and thus increases risk under your name, lowering your CIBIL score.
  • Absence Of Variety In Credit Products: If you have efficiently handled multiple varieties of credit products in the past, it shows versatility in your credit report. Not having a mix of various products affects your CIBIL score slightly.
  • CIBIL Report Errors: There might be an error in your CIBIL report due to a mistake made by the credit company or your bank. This may not be your mistake; however, this will affect your credit score.

Methods To Improve Your Credit Score

A low credit score affects you negatively and becomes a roadblock in obtaining credit when there is a dire need. Thus there is an essential requirement to improve your credit score. Follow the below-given steps to improve your CIBIL score.

  • Constantly go through your CIBIL report on CIBIL score. You can always use the CIBIL score app. If you find any error on the end of TransUnion CIBIL or your bank, inform the respective party as soon as possible and get it rectified.
  • Try to pay off your debt instead of settling it. Debt settlement should always be the last option.
  • Manage your EMIs and credit card dues effectively and always pay them on time. Just this step will immensely improve your CIBIL score.
  • Do not apply for a credit or a credit card at multiple places at a time.


A low CIBIL score can affect you in various ways, and even your very minute mistakes can lead to a low CIBIL score or a bad credit report. Unfortunately, many people do not realise this and do not heed the importance of the CIBIL score. However, it is imperative to keep a constant eye on your CIBIL report and score and keep taking small steps to keep it above 750.  


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