Top 7 Mistakes That Lower Your CIBIL Score (Avoid These in 2026)
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| Top 7 CIBIL Score Mistakes |
Your CIBIL score plays a major role in deciding whether your loan or credit card gets approved or rejected.
Still, many people unknowingly make small mistakes that slowly damage their CIBIL score.
The worst part?
Most of these mistakes are 100% avoidable.
In this detailed guide, you’ll learn the top 7 mistakes that lower your CIBIL score, how they affect your credit profile, and what to do instead.
Why Is CIBIL Score So Important?
Your CIBIL score reflects how responsibly you handle credit. Banks and NBFCs use it to judge:
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Loan approval chances
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Interest rates
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Credit card limits
A score of 750+ is considered good in India.
Anything below that can make borrowing expensive or difficult.
1️⃣ Missing EMIs or Paying Late (Biggest Mistake)
Missing EMIs is the number one reason why CIBIL scores fall.
How this hurts your score:
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Even 1 missed EMI is reported
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Late payments stay on your report for years
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Repeated delays show you as a risky borrower
Real-life example:
If your EMI is due on the 5th and you pay on the 10th,
that delay is recorded—even if it’s just once.
What to do instead:
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Set auto-debit for all EMIs
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Keep minimum balance in your bank account
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Use calendar reminders
👉 Payment history contributes the most to your CIBIL score
2️⃣ Using Too Much Credit Card Limit
Many people think:
“I’ll pay the bill on time, so limit usage doesn’t matter.”
❌ This is wrong.
What is credit utilization?
It is the percentage of credit limit you use.
Example:
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Credit limit = ₹1,00,000
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Used amount = ₹70,000
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Utilization = 70% (bad)
Why this lowers your score:
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High usage signals financial stress
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Banks prefer utilization below 30%
What to do instead:
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Keep usage under 30% of total limit
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Pay bills before due date
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Request limit increase if income has grown
3️⃣ Applying for Too Many Loans or Credit Cards
Each loan or credit card application creates a hard inquiry.
How this damages your score:
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Multiple inquiries in a short time look risky
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Banks assume credit hunger
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Score may drop temporarily
Common mistake:
Applying for:
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Multiple credit cards
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Loan eligibility checks on many apps
What to do instead:
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Apply only when needed
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Space applications at least 3–6 months apart
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Check eligibility before applying
4️⃣ Settling Loans Instead of Paying Full Amount
Loan settlement is often misunderstood.
What is loan settlement?
You pay a reduced amount, and the lender closes the loan.
Why this is dangerous:
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Settlement is marked negatively
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Stays on credit report for years
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Banks see it worse than late payments
Example:
Loan amount: ₹1,00,000
Settlement paid: ₹70,000
➡️ Credit report shows “Settled”, not “Closed”
What to do instead:
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Always try to pay full dues
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Negotiate EMIs, not settlements
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Settlement should be last option only
5️⃣ Closing Old Credit Cards or Loans Too Early
Many people think closing old cards improves score.
❌ Actually, it can hurt.
Why this lowers your score:
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Shortens credit history length
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Reduces total available credit
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Increases utilization ratio
Example:
Old credit card (10 years) closed →
Your credit history suddenly looks shorter.
What to do instead:
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Keep old, no-fee cards active
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Use them once every few months
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Close only unnecessary high-fee cards
6️⃣ Ignoring Errors in Your CIBIL Report
Credit reports are not always perfect.
Common errors:
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Loan shown as active even after closure
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Wrong EMI status
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Duplicate loan entries
Why this hurts:
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Errors lower score unfairly
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Banks trust reports, not explanations
What to do instead:
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Check CIBIL report every 3–6 months
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Raise dispute immediately for errors
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Track dispute resolution status
👉 Many people improve scores just by fixing errors
7️⃣ Having No Credit History at All
Surprisingly, no credit history is also a problem.
What happens:
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CIBIL shows NH / NA (No History)
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Banks cannot judge your credit behavior
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Loan approval becomes difficult
Who faces this?
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Students
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First-time earners
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People who never used credit cards
What to do instead:
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Take a secured credit card
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Small consumer loan
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Repay on time for 3–6 months
This builds a healthy credit profile.
Extra Mistakes People Often Ignore
❌ Co-signing loans for risky borrowers
❌ Skipping small credit card dues
❌ Paying minimum amount only for months
❌ Not updating PAN or personal details
Each of these can silently damage your score.
How Long Do These Mistakes Affect Your CIBIL Score?
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Late payments → up to 3 years
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Settlements → long-term impact
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Hard inquiries → temporary (3–6 months)
👉 The good news: CIBIL score can always be improved with discipline.
Quick Checklist to Protect Your CIBIL Score
✔️ Pay EMIs on time
✔️ Keep credit usage below 30%
✔️ Avoid unnecessary loan applications
✔️ Never settle loans unless unavoidable
✔️ Maintain long credit history
✔️ Check report regularly
Frequently Asked Questions (FAQs)
Does paying minimum due affect CIBIL score?
Yes, if done repeatedly, it increases utilization and hurts score.
Can one missed EMI ruin my CIBIL score?
One EMI can reduce score, but recovery is possible with regular payments.
How fast can I improve my score?
Minor issues: 3–6 months
Major issues: 6–12 months
Final Thoughts
Your CIBIL score doesn’t drop suddenly—it falls because of repeated small mistakes.
Avoiding these 7 common mistakes can protect your credit health and help you get loans at better interest rates.
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