10 Jan What’s the Impact of Cheque Bounce on Your CIBIL Score?
The most important aspects you need to consider while applying for a loan from any bank or financial institution is your credit score which is often considered as a CIBIL Score. Maintaining a consistent CIBIL score is one of the most significant considerations if you intend to take out a loanin the near future as it helps the bank to determine the financial ability to return the money within the specified period along with due interest.
When we’re talking about CIBIL score, one of the main hindrances that can limit your credit score is a bounced cheque. Although it may have an adverse effect on your CIBIL, it’s not the same in all test bounce situations.
In this post, we’re letting you know what the CIBIL score is and what the optimal CIBIL score you should strive to maintain. Along with that we will get you know about how your credit score is impacted by a cheque bounce events and also point out variables that have no impact on your CIBIL score.
What exactly the CIBIL Score is?
In simple words, CIBIL score is a numerical interpretation of your ability to pay your credit or, in other words, it illustrates how regular you are when it comes to debt payment. Generally, a CIBIL Score is calculated and provided by the Credit Information Bureau India Limited (CIBIL). The CIBIL score range ranges between 300 and 900. The higher the score, the better a loan will be for you. Anything more than 750 is considered as a better score for credit.
Does the CIBIL score impact Cheque Bounce?
In general, a check bounce situation occurs when your bank account has inadequate funds for redemption through a cheque. In such circumstances, the financial institution returns the cheque to the withdrawer quoting the reason as “insufficient funds.” When applying for a loan or credit card, this can probably create major problems for you in the future because banks feel insecure about lending to someone who has already been unable to pay their debts.
Hence, it is always recommended that your bank account must have sufficient funds when you are applying for the loan such that banks and lending institutions are sure of your financial stability and do not hesitate to give you the money.
Now get a precise view on the Factors that do not affect your CIBIL score
Generally, banks are not at all concerned about your division of assets or savings, they care about whether you are able to pay your debts within a time or not. Most people are afraid to apply for a loan because they feel that their credit does not have sufficient amounts of investment. However, it may be reinforced that your investment portfolio does not make any differencewhile deciding your CIBIL score.
For those people who all are thinkingabout previously obtained loans make them unable to apply to subsequent loans, it should be noted that having a successive loan does not adversely affect your CIBIL score until and unless are consistent with your EMI payments.
Inoperative Savings Account
Maintaining a low balance in your bank account is not at all a reason that lowers your CIBIL score. Typically, account holders are under the impression that their CIBIL score will fall with a low balance in their bank account. It should be noted, that a CIBIL score is only for information about any credit and the borrower’s repayment, and is not concerned about the amount of credit that the account maintains.
Spouse’s Credit Score
The other myth about CIBIL score is that your spouse’s credit score influences your own score. Indeed, it can be made clear here that this is not the case unless both the husband and the wife seek a joint loan. Lenders should realize that, when it comes to finances, a husband and wife are completely separate entities and the efficiency of a partner in terms of credit payment does not impact each other. It is also advised that a joint loan can only be received if there are tax benefits or if the partner is a qualified employee as such an advantage strengthens your CIBIL score together.
Multiple Credit Cards
Many people often believe that having multiple credit cards would dissuade them from using loans and would affect their CIBIL score negatively. In essence, however, if a person pays his / her credit card bills in time and in full, having multiple credit cards cannot be a dissuasive when they are extending their loans. In reality, it only allows the financial institution to get a better understanding of your financial payment scheme and therefore makes them better serve.