Debunking Common Myths about CIBIL Score

In the world of finance, the term ‘CIBIL Score’ is often thrown around. But what does it really mean? And more importantly, how does it impact you?. In this article we aim to demystify the concept of CIBIL Score and debunk some of the most common myths surrounding it.

Understanding CIBIL Score

CIBIL Score, also known as Credit Score, is a three-digit number ranging from 300 to 900. This score is a measure of an individual’s creditworthiness, i.e., the likelihood of them repaying their debts. Banks and financial institutions often use this score to evaluate the potential risk posed by lending money to consumers.

Now that we have a basic understanding of what a CIBIL Score is, let’s dive into some of the common myths associated with it.

Myth 1: Checking Credit Report Regularly Can Impact Your Score

One of the most prevalent myths is that checking your credit report regularly can negatively impact your score. This is not true. Checking your own credit report is considered a ‘soft pull’ and does not affect your score. So, feel free to check your credit report as often as you like without worrying about it affecting your CIBIL Score.

Myth 2: Your Income is a Contributing Factor to Your Credit Score

Another common misconception is that your income directly influences your CIBIL Score. This is not the case. Your credit score is determined by your credit history, not your income. Factors such as your payment history, the amount of debt you have, and the length of your credit history play a much more significant role in determining your score.

Myth 3: Poor CIBIL Score Means No Loan

Many people believe that a poor CIBIL Score means they will not be able to get a loan. While it’s true that a poor score can make it more difficult to get a loan, it does not mean it’s impossible. Many lenders are willing to work with individuals with lower scores, although the terms of the loan may not be as favorable.

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

It’s a common belief that having a debit card can improve your credit score. However, this is a myth. Debit cards do not contribute to your credit score. Unlike credit cards, debit card transactions do not involve borrowing money and hence, do not reflect on your credit history.

Myth 5: Closing Old Accounts Can Boost Your Credit Score

Many people believe that closing old or inactive accounts can boost their credit score. This is not necessarily true. In fact, closing old accounts, especially those with a good repayment history, can sometimes hurt your credit score. This is because it can shorten your credit history, which is a factor considered in calculating your score.

Myth 6: Your Marital Status Affects Your Credit Score

Another myth is that your marital status can directly impact your credit score. This is not true. While joint accounts or loans can affect both parties’ credit scores, your individual credit score is not directly affected by your marital status.

Myth 7: CIBIL is the only source for getting credit score/report

This is not true. There are multiple credit bureaus that provide credit scores and reports. While CIBIL is one of the most popular ones in India, there are others like Equifax, Experian, and CRIF High Mark that also provide credit scores and reports.

Myth 8: A Bad Credit Score Lasts Forever

This is a myth. With good financial habits, you can improve your credit score over time. Regularly paying your bills on time, reducing your debt, and maintaining a good mix of credit can help improve your score.

Myth 9: Anyone can check my CIBIL score

This is not true. Only you and lenders with whom you have applied for credit can check your CIBIL score. Unauthorized access to your credit report is considered a violation of privacy.

We hope this article has helped debunk some of the common myths about CIBIL Score. Remember, understanding your CIBIL Score and how it works can help you make better financial decisions. It’s always a good idea to check your credit report regularly to ensure the information is accurate and up to date. Stay financially savvy!