What triggers the ‘credit hunger' flag on your credit report and how to avoid it

Mint

16-06-2025

Credit bureaus are increasingly vigilant about identifying 'credit-hungry' consumers, signalling this behaviour through frequent loan applications or hard inquiries. This can influence your credit score and lender behaviour significantly.
Credit bureaus monitor hard enquiries, applications for loans or credit cards. Multiple hard inquiries within a short duration of time may signal credit hungry or loan‑dependence behaviour to lenders. RBI‑mandated fortnightly reporting since January 2025 has fast‑tracked borrowers' activities into credit files. This heightened frequency means high-risk patterns are detected more rapidly.
Not only this, as a responsible borrower you should try to ensure that your credit utilisation ratio is kept in check and you are never in a position to be overly dependent on just credit to meet day to day expenses.
Sameer Mathur, MD and Founder of Roinet Solution, says 'Credit bureaus typically flag credit hunger based on the type and frequency of enquiries. A soft enquiry, such as checking loan eligibility, is harmless and doesn't impact your score—it simply shows that you're exploring your options. But a hard inquiry, which happens when you formally apply for credit, indicates a strong intent to borrow. When multiple hard enquiries occur in a short span, it signals to lenders that the borrower might be under financial stress.'
It is therefore like walking into five different financial institutions and banks in a week requesting them for personal loans. Eventually they will take note of this and presume that you are in financial trouble. That is how credit bureaus see frequent hard inquiries.
Echoing this, Manish Shara, Co-founder & CEO of ZET, says 'Applying for several credit cards or loans back-to-back sets off red flags at credit bureaus. This behaviour is commonly tagged as 'credit hungry', often pointing to financial instability or overdependence on borrowed funds. Each hard inquiry slightly erodes your credit score, so a smarter approach is to space out your credit applications, borrow only when truly needed, and maintain a solid repayment track record.'
The RBI has mandated lenders to update credit data every 15 days, replacing the old and outdated monthly cycles. That is why, even the speed of loan applications now plays a role, not just the amount borrowed. This shift benefits focused and disciplined borrowers whose consistent on time repayments reflect quickly but also highlights those applying for multiple credit lines in quick succession.
Frequent applications are a clear sign of financial stress, a point echoed across industry channels. RBI's goal is to curb over‑leveraging by detecting such behaviour early. So that defaults and bad practices in lending can be curtailed. Lenders may interpret rapid credit applications as default risk, potentially leading to higher interest rates or declined credit. Space out your loan applications to ensure that you minimise hard enquiries. Focus on only applying when necessary.
Seek pre-approved offers, all such offers generally use soft checks and don't hurt your credit score or damage your credit profile in any way.
Manage credit utilisation by purposefully capping card use below 30‑40 %. This strict practice helps avoid red flags.
Monitor your report on a consistent basis, check for any unauthorised inquiries; quickly report any fraudulent applications promptly.
In our nation, a healthy credit score (750+) facilitates better personal loan terms and access to premium credit card products from leading financial institutions.
Conversely, being flagged for credit hunger can push one into risky interest categories, higher default probability or trigger denials. With faster credit bureau updates, even short sprees in credit seeking can have long lasting effects.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.