How multiple credit inquiries impact CIBIL Score?

Do Multiple Credit Inquiries Impact CIBIL Score?

We all know how important the CIBIL Score is for personal loan approvals. It is a 3-digit number that indicates your financial creditworthiness. Unless you have a decent CIBIL Score, getting a loan is almost impossible.

A lot of other financial decisions depend on your creditworthiness. For instance, how much you can borrow, interest rates, and more. 

Precisely, it is best to keep an eye on your CIBIL Score and make constant efforts to improve it, if needed. 

The question is - can multiple inquiries for your CIBIL Score impact it negatively? The answer is ‘Yes’ and ‘No’. Depending on who is initiating the inquiry, the answer will vary. 

So let’s figure it out together. And find the best practices to keep your CIBIL score healthy.

What is a CIBIL Score?

The CIBIL score depends on a lot of factors. How often do you apply for credit, and how consistent are you with your credit payments? There are many things when combined together make your CIBIL Score. 

CIBIL Score is a numerical representation that lenders refer to determine the financial history of the users. The CIBIL Score range is from 300 to 900, with 300 being the least and 900 being the highest score.

Thus, you must target to stay close to 900 to be able to fetch the best offers on your loan applications. 

Factors Impacting CIBIL Score

Apart from making repayments on time and never missing the deadlines for your EMIs, there are certain things you must take care of. 

Avoid Too Many Hard Inquiries 

First off, never initiate too many hard CIBIL Score checks. However, you can go for soft inquiries as and when needed. Not sure what these terms are? Don’t worry, we will learn more about the two types of inquiries further in the article. 

Keep Your Credit Utilization Ratio as Low as Possible

Next comes the high credit utilization ratio. It essentially is the credit amount used with respect to the total approved credit. 

If you have a very high credit utilization ratio, it might influence lenders to doubt your repayment ability. Thus, you must always use only the amount needed, instead of withdrawing it all.

Is there any particular way to do that?



Thankfully, Privo has got the best solution for this. Privo offers instant credit line approvals. You can withdraw the amount you need. You do not have to pay interest rates for the unborrowed credit amount.

Plus, you can also choose the flexible EMI to repay the borrowed amount. Moreover, if you choose to complete the repayment in full, you can do it anytime. Privo does not charge a foreclosure fee. 

So, if you have a consistent credit requirement, get approval for a lump sum amount. And withdraw the funds as and when needed. 

Do Not Overuse Your Credit Cards

Every credit card comes with a credit limit. This means that you can only utilize the preset maximum amount at any time on your credit card. However, using more than 70 to 80 percent of your credit limit on credit cards could have adverse effects on your CIBIL Score. 

Those with a high credit card utilization often end up in a debt trap. Eventually, failing to repay the EMIs on time. This showcases the lack of control over your spending, letting financial institutions see you as irresponsible with your repayments.

As credit card providers set your maximum borrowing limit based on your salary, extra usage would lead lenders to believe that you are under high debts.   

All these cumulatively lower your CIBIL Score.

What is the alternative to this?

You can use Privo for a credit line. Privo is a direct lending app, designed on proprietary technology and offers instant and paperless loans to its customers.

Rather than spending too much on your credit cards, you can always open a credit line with Privo and choose to withdraw when and as needed. 

Privo saves you from making multiple inquiries and hurting your CIBIL score by giving you a one time approval to borrow as many times as you need in the future.

Plus, you always have the choice to pay full amount, whenever you have some extra cash to payback. This will help in increasing your CIBIL score. Interestingly, you do not even have to pay any foreclosure fee. This isn’t the case with most of the credit cards though.

Types of Credit Inquiries?

There are two types of credit Inquiries. One is the soft inquiry and the other is the hard inquiry.

While the soft inquiry is the request you initiate to check your CIBIL Score, hard inquiries are led by financial companies.  

Soft inquiries are also initiated by lenders on their existing customers. For instance, the credit card company usually performs a soft pull to assess if you are eligible for an increased credit limit on your card.

Negative Impact of Multiple Credit Inquiries

We often hear that too many credit inquiries can impact your CIBIL Score negatively. Well, this is true in case of hard pull or hard inquiry. However, there is no detrimental impact on your credit score if you do soft inquiries. 

You can anytime check your CIBIL score. Rather, it is wise to keep an eye on your CIBIL score to understand your financial well-being. 

On the other hand, hard inquiries are registered on your credit report, thus decreasing your CIBIL score aggressively.

Therefore, you must aim at avoiding applying for a loan when you already have open credit. 

Conclusion

By now, you already know how credit inquiries can impact your CIBIL Score. With too many hard inquiries, you become a credit-hungry customer in the eyes of lenders. This leads to more rejections. Thus, further reducing your CIBIL Score. 

However, with Privo, you do not need to go through the multiple hard inquiries. Instead, you can activate a credit line once. Later, you can withdraw the required amount in parts and pay in flexible EMIs. Borrowing can be made in any ratio within the approved tenure. And, there is no foreclosure fee, if you plan to repay in full.

In short, you can say goodbye to multiple hard inquiries and protect your CIBIL score, if you choose Privo