A bad CIBIL  Score can have a wide range of negative consequences. Late payments are unlikely to be your only issue if you tend to pay your bills beyond the due date. Poor borrowing practices destroy your credit, making it far more difficult to get loans in the future. They might also make getting a telephone contract or even certain employment difficult. Here are just a few of the conceivable outcomes. A low CIBIL score can complicate your life, including delaying retirement by costing you more money over time. 

Reasons for Bad CIBIL  Score

There are multiple reasons for a bad credit score, which are: 

Failure to pay debts on time

The most crucial aspect that significantly impacts your CIBIL  score is your payment history. Your repayment history determines 35% of your CIBIL  score. As a result, you must pay all of your invoices or EMIs on time. Delays in paying invoices or late payments might lower your CIBIL  score. 

Excessive use of credit limit

There are certain credit limits. If you want to increase your CIBIL  score, you should constantly keep your credit utilisation ratio low. This indicates that you should not exceed your credit card limit and should minimise your usage. According to financial experts, individuals should only utilise 30% of their overall credit card limit. Your credit exposure determines 30% of your CIBIL  score. Your credit score will suffer if you have a high credit use ratio. Using your full credit card limit shows that you are unable to pay your payments on time and are unable to manage your credit.

Obtaining many unsecured loans

If you have significant exposure to unsecured loans, your credit score will suffer, leading to future problems. Keeping a balance in the types of loans you obtain is critical. As a result, it is recommended that you have both secured and unsecured loans, as this will improve your CIBIL  score. Multiple unsecured loans reduce your CIBIL  score. However, credit choices such as house loans assist you in raising your CIBIL  score. 

Making frequent credit inquiries

If you’re just getting started with credit cards, stick to one at a time. Having many credit cards might be confusing since you may lose track of your costs. Furthermore, remembering the due payment dates of many credit cards becomes challenging. As a result, it is best not to do many credit queries simultaneously, as repeated inquiries might lower your CIBIL  score. It also gives the impression that you are credit-hungry.

Consequences of Bad CIBIL Score

It is necessary to learn about how to improve CIBIL Score. Before learning that, you should know the consequences of having a bad credit score. Here they are: 

Trouble getting loans

Some banks have stringent lending criteria. You may be unable to obtain traditional loans or credit cards if you have a low credit score. In India, creditworthiness analysis can get your quick loan approval. Therefore, most companies’ first step for checking a candidate’s eligibility is to check their CIBIL  score. 

With a poor credit score, obtaining a car loan, house loan, or even a credit card becomes difficult. Even if you qualify for any choice, you will almost certainly be charged a high-interest rate, which is not a desirable alternative. Even if you obtain financing at a high-interest rate, you are in danger of default. A credit score of 700 to 900 is ideal for obtaining the greatest interest rates on any loan.

The trouble with Insurance premiums hike

A decline in your credit score will not immediately raise your premium, nor will it result in the cancellation of your policy if it falls below 600. However, a poor credit score may hinder you from obtaining the best available rate. You will undoubtedly pay a higher interest rate if you acquire a loan with a poor CIBIL  score. Unfortunately, the insurance premium you purchase against your loan will be expensive.

Trouble with renting 

No renter wants to dwell in a house where the landlord cannot pay the rent to the banks on time. Homeowners who accept a high-interest rate owing to poor credit suffer when asking for a loan. When they try to rent out the property, their predicament worsens. 

If you have bad credit, you may need to locate a cosigner or pay a security deposit before signing a new lease. Renting an apartment with negative credit is not impossible, but it might be much more difficult. 

Most hospitals use a credit check to determine your financial capacity. It becomes difficult for those with poor credit to obtain hospital admittance in an emergency.

Trouble with utilities

Everyone wants to keep a separate account to handle and pay their utility bills. On the other hand, people with poor credit have difficulty opening an account with a utility. Before joining, such consumers are frequently advised to provide a deposit. It guarantees that your deposits are deducted if you fail to pay your utility bills.

The trouble with accumulating riches

Regardless of your sector expertise, you will have a difficult time being hired if you have a poor credit score. Large corporations review your career history and evaluate your credit score to learn about your purchasing habits. Some companies want to know how well you handle your money and expenses, so they check your CIBIL  score.

When interest rates are high, you invest less money into equity and assets and more money into debt payments. And debt has no return on investment; the interest you pay is money you will never see again. 


That being said, you are now fully informed of the disadvantages of poor credit scores. Financing specialists constantly advise increasing your credit score and obtaining necessary credit with low-interest rates in the future. You must learn about how to improve CIBIL Score in our other blogs and ensure to boost your credit score.