Monday, 19 October 2015

Why does the CIBIL Score keep changing?


Do you find your CIBIL score to be different each time you withdraw your CIBIL report?

A question that is top of the mind for most consumers is why does the credit score change? If you have recently got a copy of your CIBIL report and have observed a change in your score from earlier, read on to know why.



First and foremost, it is important to know that the credit scores are dynamic in nature and are an outcome of various factors like length of your credit accounts, repayments, amount outstanding on your credit cards among others. And since these are not static factors and keep changing on an ongoing basis, the score also keeps getting impacted.

However, the changes could be for both short and long term. A few factors shall while impact it only for a while there could be to others that may lead to a long term or even permanent change in one’s score. Let us understand this in little detail.

The inquiries for example may have a bearing only for a short-term. When you open a new loan or credit card account, an inquiry is reflected on your report, which can cause your score to drop. However, upon diligent usage of the account – including regular payments – over time the score will come back up.

Consider a scenario wherein a consumer forgets to make a payment on the amount outstanding on a credit card. This financial behaviour could potentially make the score take a hit. A regular default on payments of obligations can lead to a sever impairment and the scores can nose dive.

Any changes to the information in your credit report made by the bureau can cause a movement in the score. It is wise to check your score on a regular basis, as this will help you keep track of any changes at the earliest. You will also be able to identify any irregularity in the account, be it erroneous entries, or incorrect trade lines that could be indicative of identity theft. Check the security and accuracy of your financial information to remain credit healthy.

It is also important to know that CIBIL being the oldest of the four credit bureaus is synonymous with a credit score. However, one can avail of a score from any of the bureaus.

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