Common credit card and loan mistakes that hurt your CIBIL score

1. Paying late, even by a few days

Payment history is the most important part of your score. A payment reported as overdue stays on your record and can pull the score down noticeably, and repeated delays do more damage than a single one. Set auto-debit for at least the minimum amount on every card and loan, and keep enough money in the account to cover it.

2. Paying only the minimum

Paying the minimum due keeps the account current, but it leaves a high balance sitting against your limit and racks up expensive interest. High balances relative to the limit are read as a sign of financial stress.

3. Using most of your credit limit

Utilisation is how much of your available limit you are using. Consistently using a large share of it lowers your score, even if you always pay on time. A common rule of thumb is to keep it well below about a third of the limit. If your spending is high, ask for a limit increase rather than pushing against the ceiling, or spread spending across cards.

4. Applying for too much credit at once

Each application triggers a hard enquiry that is recorded on your report. A cluster of them in a short time suggests you are desperate for credit, and lenders notice. Compare offers using eligibility checkers that do not run a hard enquiry, and apply only where you have a good chance of approval.

5. Closing your oldest card

Closing a long-standing account shortens your average credit history and reduces your total available limit, which can raise your utilisation. If the card charges a fee, ask for a downgrade to a free version instead of closing it.

6. Settling a loan instead of closing it

When you cannot repay in full and negotiate a lower one-time payment, the account is often marked "settled" rather than "closed". A settled status signals that the lender did not get everything owed, and it can make future borrowing much harder for years. If you must negotiate, ask about closing the account as paid in full after clearing dues, and get every agreement in writing.

7. Standing guarantor or co-applicant without thinking

When you guarantee or co-sign someone else's loan, it appears on your report too. If they miss payments, your score suffers. Only take that role for a borrower you trust and can afford to cover.

8. Never checking your report

Errors are more common than people expect: a loan that is not yours, a payment wrongly marked late, a closed account shown open. You can get a free full credit report from each bureau once a year. Read it, and dispute anything wrong with both the bureau and the lender.

This is general information, not personal financial advice.