11 CIBIL Score Myths Busted!

CIBIL scores play a crucial role in determining an individual's creditworthiness. However, there are numerous misconceptions surrounding this scoring system that can mislead consumers. By understanding the truth behind these myths, you can make informed decisions regarding your credit health. In this blog, we will debunk 11 common CIBIL score myths and shed light on the facts behind them. Let’s begin!

Debunking Common Myths About CIBIL Score

Here are some of the common CIBIL score myths:

Myth 1: Checking Your Credit Report Regularly Can Hurt Your CIBIL Score

Checking your credit report regularly has no impact on your CIBIL score as it is considered a soft inquiry. In fact, monitoring your credit report regularly helps you identify inaccuracies or fraudulent activities promptly. It gives you the opportunity to rectify them before they negatively affect your score if checked regularly.

Myth 2: Your Income Contributes to CIBIL Score

Your income does not directly influence your CIBIL score. The factors affecting CIBIL score include your repayment history, credit utilisation, length of credit history, and the type of credit you use. Having a stable income helps you repay your debt on time, which improves your credit score.

Myth 3: Poor CIBIL Score Means No Loan

While a poor credit score affects your loan eligibility, it does not make you ineligible for a loan. Some lenders specialise in offering loans to individuals with low credit scores. However, these loans may come with higher interest rates and other stricter terms and conditions.

Myth 4: Having a Debit Card is Good for Your CIBIL Score

Your debit card usage does not impact your CIBIL score. Unlike credit cards, debit cards are linked to your bank account and do not involve credit transactions. However, consistently paying credit card bills on time can positively impact your score.

Myth 5: Closing Your Old Accounts Will Improve Your CIBIL Score

Closing old credit accounts can actually lower your CIBIL score. The length of your credit history is an important factor considered while calculating your credit score. Therefore, maintaining a long credit history with a good repayment record may positively impact your credit score.

Myth 6: Your Marital Status Changes Your CIBIL Score

Your marital status has no direct influence on your CIBIL score. Each individual has a separate CIBIL score, regardless of their marital status. However, when you apply for a joint loan or credit account, both individuals' credit scores will be taken into consideration.

Also Read - What is Minimum CIBIL Score Required to Get A Personal Loan?

Myth 7: Any Person Can Check Your CIBIL Score

Only you, the credit bureau, and authorised lenders can access your CIBIL score and credit report. Other individuals or companies cannot access this information unless you provide consent or request a credit report on their behalf.

Myth 8: Applying for New Credit Always Hurts Your CIBIL Score

While making multiple inquiries within a short time frame can temporarily lower your credit score, applying for new credit occasionally is not necessarily detrimental. A single application has almost negligible impact on your credit score. In fact, utilising a mix of credit facilities may be good for your credit score.

Myth 9: A Good CIBIL Score Lets You Avail a Loan with Lower Interest Rates

This is mostly a CIBIL score fact. However, while a good CIBIL score positively impacts your loan approval chances, lenders also consider additional factors when determining interest rates. These factors include income, tenure, employment stability, and the loan amount requested.

Myth 10: Clearing Off Debt Will Remove the Transaction Record From Your Credit Report

Paying off your debts does not erase your transaction history from your credit report. Completed transactions will remain on your credit report for a specific period. However, records of timely payments contribute positively to your credit score.

Myth 11: Zero Credit is the Real Deal

Having no credit history is almost as challenging as having a poor credit history when it comes to applying for loans. Lenders rely on credit history to assess your repayment behaviour and creditworthiness. Establishing and maintaining a responsible credit history is crucial for a healthy credit score.

Also Read - How CIBIL Score is Calculated | A Step-by-Step Guide

To Conclude

By debunking these common CIBIL score myths, you now possess a better understanding of how this scoring system functions. Remember to regularly check your credit report, maintain a good credit history, and make timely repayments to improve and maintain a healthy CIBIL score. Improving your CIBIL score should be your top priority as it helps you access better financial opportunities.

Frequently Asked Questions

1. Does checking my CIBIL report hurt my credit score?

No, checking your CIBIL report yourself is considered a "soft inquiry" and does not affect your score. It's actually good to monitor your report regularly for any errors.

2. Will getting married hurt my credit score if my spouse has a bad score?

Your CIBIL scores are not linked by marriage. However, if you apply for credit jointly with your spouse, both your scores will be considered.

3. Does paying off my debts immediately remove them from my credit report?

Paying off your debts is great for your credit score, but it won't erase the history from your credit report. Positive payment information remains for a long period, helping your score.

4. Is a good CIBIL score the only factor lenders consider for a loan?

A good CIBIL score is important, but lenders also consider factors like your income, employment history, and loan purpose when making a decision.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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