In the case of credit score, apart from loan payment history, there are many other factors which affect the CIBIL score and the most important one among them is CUR i.e. Credit Utilization Ratio. Let us tell you what happens.
Credit score matters a lot in the matter of loan. Credit score is the measure of credibility on the basis of which banks decide whether to give loan to the person applying for the loan or not. If the credit score is bad, it becomes difficult to get a loan and even if it is available, the interest rate is very high. Many things are taken into consideration while calculating credit score.
In this, Loan Payment History is seen first. If you have taken any loan before, whether you paid its EMI on time or not. Loan payment history has a big impact on your CIBIL score. But apart from this, there are many other factors which affect the CIBIL score and the most important one among them is CUR i.e. Credit Utilization Ratio. Let us tell you what happens.
What is CUR?
Credit Utilization Ratio (CUR) means what percentage of your credit card limit you use in a month. The higher the percentage of amount you use, the higher will be your CUR. For example, if the total credit limit on your credit card is Rs 100,000, but you have spent Rs 50,000 from it, then your credit utilization ratio will be 50%.
How does CUR affect credit score?
Credit utilization ratio should not be more than 30%. If your credit utilization ratio continuously remains more than 30%, then it sends a message to the bank that your dependence on the credit card is high. This may deteriorate your credit score. On the other hand, if you spend keeping this limit of 30% in mind and make payments on time, then your CIBIL score is much better.
