Credit Score Guide #58: Why CIBIL Score Drops After a Loan Approval

 

Got a Loan Approved & Score Dropped? Here's Why (And How to Fix It)

If your CIBIL dropped after a loan approval, don’t panic. It’s normal — and here’s what caused it + what you can do.

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📉 Reason 1: Hard Inquiry

When banks check your CIBIL before giving loan = hard inquiry
Too many = score dips by 5–10 points per check.

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📉 Reason 2: New Credit Line Added

Your loan adds a new liability. Initially, it increases your debt-to-income ratio, which lowers score temporarily.

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📉 Reason 3: High Loan Amount Relative to Your Income

If the EMI is a large chunk of your monthly income, lenders view you as higher risk.

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📈 How to Recover Your Score

• Pay first 6 EMIs on time — CIBIL improves
• Avoid applying for new credit too soon
• Keep credit card usage below 30%
• Avoid closing old credit cards

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✅ Conclusion

Score drop post-loan = temporary. Your repayment discipline is what turns things around fast. Don’t worry, just stay on track.

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