Does your CIBIL score get affected if a cheque bounces?:Know 8 reasons why cheques bounce, and 10 things to keep in mind if you want to increase your credit score

Many times, we issue a check for some work, and it bounces. Usually, this happens due to insufficient balance in the bank account or a technical error. In such a situation, the first question is, does this affect your CIBIL score? We all know how important a CIBIL score is for any loan and credit card. If it deteriorates, not only does it become difficult to get a new loan, but banks can also charge higher interest rates. In such a situation, today in the Your Money column, we will learn: Question – What is a CIBIL score and why is it important? Answer – A CIBIL score is a three-digit number, ranging from 300 to 900. It reflects your credit history and ability to repay loans. The higher this score, the more capable you will be considered for taking a loan, and the interest rate on the loan will also be lower. Understand it this way: if your CIBIL score is 750 or above, banks can approve your loan application quickly and easily.
On the other hand, if the score is 650 or less, you may face difficulties in getting a loan, and banks may charge higher interest rates. Therefore, maintaining a good CIBIL score is extremely important. Question – What is a bounced check? Answer- A bounced or dishonored check occurs when a check issued by your bank does not clear and payment cannot be made. There can be several reasons for this. Usually, this happens due to insufficient balance. Often people get worried when a check bounces and think that it will immediately lower their CIBIL score. Question- What are the reasons for a check to bounce? Answer- There can be several reasons for a check to bounce. See some common reasons in the graphic- Therefore, it is very important to keep these things in mind while making payments by check. Repeated check bounces can affect your financial record. Question- Does a bounced check directly affect the CIBIL score? Answer- Usually, this is not the case. Banks or financial institutions do not directly send information about bounced checks to CIBIL or any other credit rating agency.
Therefore, merely a bounced check does not directly harm your credit score. Question- When does a bounced check affect the CIBIL score? Answer- If, due to a bounced check, your EMI or credit card payment cannot be made on time, the bank may report it to the credit rating agency. Missed EMI or late credit card payments can affect your CIBIL score. For example, if your check bounced and because of that you could not pay your loan installment on time, your CIBIL score might drop. This could make it difficult to get a loan or credit card in the future. Question- What happens if checks bounce repeatedly? Answer- If checks are bouncing repeatedly and this causes your EMI or credit card payments to be late, your CIBIL score can fall rapidly. However, if EMI has been late only occasionally or a check has bounced once or twice, it does not have much effect. In this case, your score remains between 700-750.
In such a situation, getting a loan is possible, but the interest rate might be slightly higher or the bank might offer a lower loan amount. Question- What are the ways to avoid check bounce? Answer- There are some easy and effective ways to avoid check bounce. Question – What should be done after a check bounces? Answer – If your check has bounced, immediately contact the bank and the beneficiary. Make the payment promptly and, if necessary, obtain correct information from the bank and re-issue the check. Timely resolution reduces the chances of missing EMI or credit card payments and does not affect your CIBIL score. Question- How to improve CIBIL score affected by check bounce? Answer- If your CIBIL score has dropped for any reason, take these steps to improve it. Let’s understand this through a graphic. Overall, a check bounce does not directly affect your CIBIL score, but if it causes your EMI or credit card payments to be delayed, it can indirectly damage your CIBIL score. Therefore, always be careful when issuing checks, maintain sufficient balance in the account, and fill in all details correctly. CIBIL score is not just a number Always remember that your CIBIL score is not just a number; it is a testament to your financial credibility and your ability to take loans in the future. With small precautions, you can keep your score strong and obtain loans or credit cards without hassle in the future.