Will going debt-free impact my CIBIL Score?
CIBIL Score tells lenders how responsible you are with borrowed money. It ranges from 300 to 900, and the higher your score, the better your financial health appears. It’s calculated based on your credit history and how you’ve handled loans and credit cards in the past.
Impact of debt on CIBIL Score Believe it or not, having some debt is a good thing for your credit score. It shows lenders that you can handle credit reliably without getting overwhelmed. Like, when you pay your credit card bills and loan EMIs on time or balance how much of your available credit you’re using every month.
Such financial habits help you nurture your creditworthiness. But here’s the thing – it’s a delicate balance. Too much debt can tip the scales the wrong way and cause your credit score to take a hit.
Does going debt-free affect your CIBIL Score? So, what happens when you decide to rid your life of debt entirely? Will your credit score take a nosedive? Not at all! When you become debt-free by paying off all your loans and credit card dues, it’s like crossing the finishing line in a marathon. You’ve achieved a significant milestone, and your CIBIL Score gets a boost. So, going debt-free positively influences your credit score.
Benefits of going debt-free A high CIBIL Score along with a debt-free financial record certifies an individual’s trustworthiness as a borrower. This brings with it numerous advantages, such as: Strategies for maintaining a good CIBIL Score Here are some things you can do to maintain a healthy CIBIL Score: Debunking myths Before we wrap up, let’s bust some credit myths. Myth: You need to carry a balance on your credit card to have a good score.
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