Why your credit history can fall despite paying your card dues and loans on time. Keeping the credit utilization ratio

Making numerous credit enquiries within a brief period of the time can cause a significant reduction in your credit history

Credit agencies give consideration to numerous facets while determining your credit history. Any adverse event related to other aspects can significantly reduce your credit score while the loan repayment history is believed to receive the maximum weightage among all the factors.

Listed below are five feasible main reasons why your credit score may drop despite repaying EMIs or credit card debt by the date that is due.

Keeping the credit utilization ratio

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Credit Utilization Ratio (CUR) may be the percentage for the credit that is total employed by you. Since loan providers generally look at a credit utilization ratio of over 30 % as an indication of credit hunger, bureaus have a tendency to reduce credit ratings by a few points on breaching the 30 % mark.

If for example the bank card spends tend to usually surpass 30 percent of the borrowing limit, request your card provider to boost your borrowing limit or decide for a extra bank card. Doing this would boost the available borrowing limit and, therefore, lower your credit utilization ratio, offered you may not boost your card spends after acquiring the credit limit that is additional.

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