Late payments or defaults in the recent past: Your payment history has a significant impact on your Score. Hence, if you have missed payments on any of your existing loans, over the last couple of years, your Score is likely to be negatively affected because it indicates that you are having trouble servicing your existing obligations.
While the balances on your loans will only reduce over time as payments are made, you must be diligent about making timely payments on your credit cards. While increased spending on your credit cards may not necessarily negatively affect your Score, an increase in the current balance on the card over time is an indication of an increased repayment burden and may negatively impact your Score. It’s always prudent to not use too much credit.
A higher concentration of Secured Loans (home loans or auto loans) is likely to be more favourable for your Score than a large number of Unsecured Loans (Credit Cards or Personal Loans). Although unsecured loans offer easy access to finance, it’s also by far the most expensive form of credit. More the number of unsecured loans with high utilization, larger are the payments resulting from its high rate of interest.
If you have made many applications for loans in a short period of time or have recently been sanctioned new credit facilities, a credit institution is likely to view your application with caution. This behaviour of seeking excessive credit indicates that your debt burden is likely to, or has increased and you are less capable of honouring any additional debt, leading to a marginal impact on your Credit Score.