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Do you know why your CIBIL score has fallen?

Aditya Kumar     August 22, 2019

Has your CIBIL score taken a downturn recently? From late payments, defaults to multiple credit inquiries, reasons could be aplenty for your CIBIL score to have fallen.

Mentioned below are some elements that can dent your CIBIL score, making it difficult for you to get loan approvals by lenders. Knowing these points will help you prevent further damage and improve your chances of approval.

Did you apply for credit with multiple lenders?

It is not unusual for people, who require money urgently, to apply for loans from multiple lenders to receive best interest rates/loan terms. However, applying with multiple lenders has its consequences - when you send-in multiple applications, your CIBIL report is pulled multiple times (separately by each lender), registering multiple inquiries in the process. Multiple inquiries are symbolic of credit hungry behaviour, and besides influencing rejection, they independently have the capability to seriously impact your CIBIL score.

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Have you made late payments in the recent past?

Late payments are another reason why your credit score might have fallen. Late payments, often in the form of delayed EMI payments or ECS bounces, are perhaps the leading cause for credit score declines. Make your payments on time and your score will see an upturn in no time.

Have you defaulted?

You might be aware of the damaging effects of defaulting on loan repayments - defaults can quite massively affect your CIBIL score. Defaults on credit cards are less impactful when compared to defaults on personal loans. Home loan defaults are the most inimical to credit health (home loan defaults having the largest impact is mostly attributable to ticket-sizes of home loans/property loans).

Have there been multiple credit inquiries in your report?

This point is closely related to the first point we talked about. Applying with direct selling agents (DSAs) can trigger multiple credit inquiries in your report, and subsequently result in your credit score witnessing a steep decline. Make sure you know where/to whom you're sending your loan application to, as several individuals have reported a fall in their CIBIL score due to multiple inquiries being registered - a direct consequence of applying with DSAs, who send your application to multiple lenders simultaneously.

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Do you have multiple credit accounts?

Multiple credit accounts in the form of multiple loans (personal loans or other types of loans) or credit cards can affect your credit health quite significantly. When looking at your credit report, lenders look at your total outstanding credit balance and the number of credit accounts to your name. If your credit utilisation ratio (the ratio of total available credit to total utilised credit) or your monthly debt-to-income ratio is high, your CIBIL is bound to be impacted due to over-usage of credit and evident display of credit-hungry behaviour.

Have you been rejected in the recent past?

Rejections are vastly problematic. Lenders take note of past loan rejections. Any rejection in the past handsomely contributes to downturn in your credit score.

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(The author is Founder & CEO at

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