How do savings and investments impact your CIBIL score?

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CIBIL score, they indirectly affect it through various financial behaviours. The factors which actually impact the credit score, also known as CIBIL score, include the payment history, debt to income ratio, ability of loan repayment, credit mix and credit utilisation ratio. Payment History: Regular contributions to savings and investments show financial discipline.

This shows positively on your payment history, which is a key component of your CIBIL score. Regular payments on loans, credit cards, and other obligations contribute to a good credit score. Debt-to-Income Ratio: Savings and investments can affect your debt-to-income ratio, which is an important factor considered by lenders.

If you have substantial savings and investments, it shows financial stability and a lower reliance on credit. At the same time, if someone has a lower debt-to-income ratio, it shows lower credit risk and can positively impact your CIBIL score. Credit Utilisation Ratio: Savings can also impact your credit utilisation ratio, which implies the amount of credit you are using out of the total available credit.

By having savings to cover expenses, you may be less likely to rely heavily on credit cards or loans, leading to a lower credit utilisation ratio. A lower ratio is seen favourable for your credit score. Loan Repayment Capacity: Investments such as fixed deposits, mutual funds, or stocks can improve your loan repayment capacity.

Banks may see these investments as additional financial resources that can be liquidated if needed to repay loans. This can impact influence your creditworthiness and CIBIL score. Credit Mix: While savings and investments do not directly impact credit mix, they can indirectly diversify your financial portfolio.