Does My Savings Account Balance Affect my CIBIL Score?
Does My Savings Account Balance Affect my CIBIL Score?
Your credit score is an essential measure of your financial health, affecting your ability to obtain credit or loans. One question that often arises is whether your zero balance savings account online balance affects your credit score, specifically your Credit Information Bureau (India) Limited (CIBIL) score or not.

Does My Savings Account Balance Affect my CIBIL Score?

Your credit score is an essential measure of your financial health, affecting your ability to obtain credit or loans. One question that often arises is whether your zero balance savings account onlinebalance affects your credit score, specifically your Credit Information Bureau (India) Limited (CIBIL) score or not.

 

This article will explore the relationship between your savings account balance and your CIBIL score and how you can improve your credit score.

 

Understanding CIBIL Score

Before delving into the relationship between savings account balance and CIBIL score, it's essential to understand what a CIBIL score is. CIBIL score is a three-digit number ranging from 300 to 900 used to evaluate an individual's creditworthiness. The higher your CIBIL score, the better your chances of being approved for a loan or credit card.

 

Your CIBIL score is based on your credit history, including your payment history, credit utilisation, length of credit history, and credit mix. Your credit utilisation ratio, or the percentage of credit you use relative to your credit limit, is essential in determining your CIBIL score.

 

Does Savings Account Balance Affect CIBIL Score?

Your zero balance savings account, such as Kotak 811savings account balance, does not directly affect your CIBIL score. Your CIBIL score is based solely on your credit history, and your savings account balance is not considered part of your credit history. However, there are some ways in which your savings account balance indirectly affects your credit score.

 

  • Credit Utilisation Ratio

As mentioned earlier, your credit utilisation ratio is essential in determining your CIBIL score. This ratio is calculated by dividing the amount of credit you use by the total amount of credit available. Since your savings account balance is not considered credit, it does not affect your credit utilisation ratio. 

 

However, suppose you have a low savings account balance. In that case, it may lead you to rely more heavily on credit, which could increase your credit utilisation ratio and ultimately lower your CIBIL score.

 

  • Overdraft Protection

Some zero balance savings accounts offer overdraft protection, which allows you to withdraw more money than you have in your account up to a specific limit. While overdraft protection can be helpful, it is essentially a line of credit you must pay back with interest. If you frequently use overdraft protection and do not repay the amount on time, it can increase your debt and lower your CIBIL score.

 

What Can Affect Your CIBIL Score?

Several factors can affect your CIBIL score. Late payments, high credit utilisation ratio, credit mix, and credit history are key factors that impact your credit score. It's essential to be aware of these factors and take steps to improve them.

 

  • Late Payments: Late payments on credit cards, loans, and other bills can significantly lower your credit score. 

 

  • High Credit Utilisation Ratio: Your credit utilisation ratio is the amount of credit you use compared to your total credit limit. A high credit utilisation ratio can negatively impact your CIBIL score.

Also Read: 5 Factors That Can Affect Your Savings Account

  • Credit History: Your credit history is vital in determining your CIBIL score. The longer your credit history, the better your credit score. 

 

How to Improve Your CIBIL Score?

While your savings account balance may not directly affect your CIBIL score, several ways exist to improve your creditworthiness and increase your CIBIL score. Here are some tips:

 

  • Pay Your Bills on Time: Late payments can significantly damage your credit score. Pay your bills on time, including Credit Card and loan payments.

 

  • Keep Your Credit Utilisation Ratio Low: Your credit utilisation ratio determines your CIBIL score. Keep your credit utilisation ratio below 30% to maintain a healthy credit score.

 

  • Maintain a Good Credit Mix: Having a mix of different types of credit, such as a Credit Card, Car Loan, and mortgage, can improve your credit score.

 

  • Check Your Credit Report Regularly: Check your credit report regularly to ensure all the information is accurate and up-to-date. Dispute any errors you find with the credit bureau.

 

Conclusion

Your zero balance online savings account balance does not directly affect your CIBIL score. Still, knowing how it can indirectly impact your credit utilisation ratio and creditworthiness is essential. 

Also Read: CUSTOMISATION AND PERSONALISATION OF ZERO BALANCE ACCOUNTS FOR DIVERSE CUSTOMER NEEDS

Maintaining a healthy savings account balance and using credit responsibly can improve your overall financial health and increase your chances of obtaining credit and loans. Additionally, regularly checking your credit report and improving your credit score can help you achieve your financial goals and help you lead a secure and stable economic life.

 

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