Category: Credit Sudhaar Complaints

How does closing a credit card account affect your CIBIL score

With multiple banks offering variety of credit cards to suite various needs of an individual, having multiple cards is not uncommon.

But managing multiple cards effectively becomes a challenge and many a times the card holder gets lured by various marketing initiatives and over spends on the credit cards. In case you are one of such card holders and are planning to cancel your cards, please consider the following prior to taking a step in this direction.

Credit card is one of those credit instruments that gives you access to funding at any point of time. The flexibility that the card extends does not only adds to comfort but more importantly has a lot of positive bearing on one’s score if utilized properly.

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Closing down credit card accounts while prevents one from over exposure to credit, and one should evaluate this option but it is important to be careful while closing your account, since it can affect your cibil score.

Since the credit score is an outcome of the way one utilizes his credit, a credit card becomes an important instrument in impacting the score. Repayment patterns and length of credit accounts grossly impact the credit scores of an individual. All other loan accounts get paid off over a period of time. A personal loan for example, has an average shelf life of about 3 years, an auto loan also on an average get paid off in about 3 years. Even a housing loan, that generally is taken with a repayment period of 20 years also get closed by paying complete outstanding amount in about 12 years. While on other hand, a credit card continues to exist for a very long time, and thus continue to impact the credit health of card holder positively.

Also, this is the only instrument where a person can hold multiple accounts with ease without having to worry about fixed monthly payments. Thus it is advisable that a person should rather having the cards cancelled, continues to hold them. He can choose not to use them regularly and for day to day purchases. But can use them once in a while to keep his credit health active and positive.

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Cleaning your credit report is a lengthy process

Credit repair is a process which helps in eliminating problematic factors from your credit report. This will help your credit report to be error free. This will hence make you creditworthy.

A person’s credit report is generally known as his credit file. The credit file contains the overall history of the credits taken by him in his entire life span. It provides information regarding number of accounts, late payments, overdue accounts, and also accounts that have been written off.

It is generally said that “Making mistakes is easy but correcting the same is a difficult task.” The same applies in case of your credit file. Mistakes such as making late payments, having overdue accounts etc. will make a negative mark on your credit report, but to remove the same mistakes from your credit report and making the report clean is a difficult task and will take time.

There can be instances that some accounts can be reported in your name which you have never applied for. These types of errors can have a negative impact on your credit report and will lead your credit score to sink.

Once you identify the errors in your report and you remove those errors from your report you will notice that your score has not increased. If you have an active trade line, then your score will increase, if not your score will remain the same.

So it is important that you have an active trade line to increase your score. Only removing errors and cleaning your credit report will not improve your score. There are also other factors that will improve your score for example having different types of credit, paying dues on time, and many more factors.

Checking your credit report frequently will help you identify errors in your report and will help you to identify factors that will improve your score.

Credit Sudhaar is India’s first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit score and make them credit healthy.

Who has an eye on your credit report?

Nowadays, a number of organizations use credit reports in determining eligibility of people to who wish to opt for their services. Basically, organizations judge those people on the basis of their credit score. Credit Score is a calculation formulated by gauging the past and present financial performance in efforts to predict the future behaviour. This in short is known as Creditworthiness.

The credit report includes a list of all the past and present credit accounts open under our name, for example loans, credit cards or all other instalments. The report records each date when the account was opened, your instalments payment history and your current outstanding balance.

 It is obvious to assume that only lenders who provide financial assistance would check credit report, but this is not the case. Your credit report is viewed by a number of other organizations. Below are the lists of some organizations that can check your credit report:

• Employers: If you wish to work in a bank or any other financial institution you shall need to undergo a credit check. But did you know that employers can require a credit check.

• Insurance Companies: Insurance companies have found that they can use credit score to determine how likely people will be paying their insurance premium.

• Insurance Agents: Insurance companies correlate credit scores with the number of claims you file. Insurance study claims that drivers who have high credit scores are less averse for claims. When one applies for a premium from an insurance company, the premium you are pay and the rate you receive is based in some part on your credit score.

Utility companies: When you open utility accounts, including electric, cable and telephone services, they also examine your credit history. Utility companies use your credit score to determine whether you will be required to put down a deposit.

Credit Sudhaar is India’s first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.