Are you planning to apply for a personal loan but worried about your CIBIL score? It’s essential to understand what factors truly impact your creditworthiness. In this article, we’ll debunk some prevalent myths about CIBIL scores and provide you with accurate CIBIL score facts to help you make informed financial decisions.
Your CIBIL score is a critical factor that lenders consider when evaluating your loan application. A high score indicates good credit health and can help you secure loans at favourable interest rates. However, there are several myths surrounding CIBIL scores that can lead to confusion and poor financial choices. Let’s clear the common CIBIL score myths and focus on the CIBIL score facts.
Myth 1: Checking Your CIBIL Score Lowers It
One of the most common misconceptions about CIBIL scores is that checking your own credit report will negatively impact your score. This is simply not true. When you request your own credit report, it is considered a soft inquiry and does not affect your score. In fact, regularly reviewing your credit report can help you identify errors or fraudulent activities, allowing you to take corrective action promptly.
Myth 2: Your Income Determines Your CIBIL Score
Another widespread misconception about CIBIL scores is that your income directly influences your score. While having a stable income is important for maintaining good credit behaviour, it is not a factor that credit bureaus consider when calculating your score. Your CIBIL score is based on your credit history, repayment patterns, credit utilisation, and other related factors.
Myth 3: A Low CIBIL Score Means No Loan Approvals
Many people believe that having a low CIBIL score automatically disqualifies them from getting a loan. Although a poor credit score can make it more challenging to secure a loan, it doesn’t mean you have no options. Some lenders specialise in offering loans to individuals with less-than-perfect credit scores, albeit at higher interest rates. By taking steps to improve your score and demonstrating responsible credit behaviour, you can gradually enhance your creditworthiness.
Myth 4: Debit Card Usage Affects Your CIBIL Score
Contrary to the widespread CIBIL score misconception, using your debit card has no impact on your CIBIL score. Debit card transactions do not involve credit and are not reported to credit bureaus. However, timely credit card payments and maintaining a low credit utilisation ratio can positively influence your score. It’s essential to use credit responsibly and make payments on time to build a strong credit history.
Myth 5: Closing Old Credit Accounts Boosts Your Score
Some individuals assume that closing old credit accounts will improve their CIBIL score. However, this is a misconception that can actually have the opposite effect. The length of your credit history is a significant factor in determining your score. Closing old accounts reduces the average age of your credit accounts, potentially lowering your score. Instead, consider keeping old accounts open and using them occasionally to maintain a long credit history.
Myth 6: Marital Status Impacts Your CIBIL Score
Another myth surrounding CIBIL scores is that your marital status plays a role in determining your creditworthiness. This is not the case. Credit bureaus do not consider your marital status when calculating your score. Each individual maintains a separate credit report and score unless you apply for joint credit with your spouse. In such cases, both credit scores are taken into account.
Myth 7: Anyone Can Access Your CIBIL Score
Lastly, there is a common misconception about CIBIL scores that anyone can access them without your consent. Rest assured, only authorised entities such as banks, financial institutions, and credit bureaus can access your credit report and score. You have the right to privacy, and your credit information is protected by law. If you suspect unauthorised access to your credit report, you can raise a dispute with the credit bureau.
| CIBIL Score Myths | CIBIL Score Facts |
| Checking your CIBIL score lowers it | Checking your own credit report is a soft inquiry and does not affect your score |
| Your income determines your CIBIL score | Income is not a factor in calculating your CIBIL score |
| A low CIBIL score means no loan approvals | Some lenders offer loans to individuals with less-than-perfect credit scores |
| Debit card usage affects your CIBIL score | Debit card transactions do not impact your CIBIL score |
| Closing old credit accounts boosts your score | Closing old accounts can reduce the average age of your credit history and lower your score |
| Marital status impacts your CIBIL score | Credit bureaus do not consider marital status when calculating your score |
| Anyone can access your CIBIL score | Only authorized entities can access your credit report and score |
By clearing these CIBIL score myths and understanding the CIBIL score facts, you can make informed decisions about your credit health. Remember, maintaining a good credit score is crucial for accessing financial products like personal loans, credit cards, and more.
Summing Up
Debunking common CIBIL score myths is the first step towards taking control of your credit health. By understanding the factors that truly impact your score and adopting responsible credit habits, you can build a strong credit profile that opens doors to better financial opportunities.
Remember, your CIBIL score is a reflection of your financial discipline and creditworthiness. Regularly monitoring your credit report, eligibility, paying bills on time, complete documentation, EMI Calculator and maintaining a healthy credit mix are key to achieving a good score.
To get started on your journey towards a better credit score, consider downloading the Airtel Thanks App. The app provides a convenient way to check your credit score and access a range of financial services offered by Airtel Finance, like personal loans, credit cards, and more. With personalised recommendations and easy-to-understand insights, Airtel Finance empowers you to take control of your financial well-being.
FAQs
- What is a good CIBIL score?
A CIBIL score ranges from 300 to 900. A score of 750 or above is generally considered good and can improve your chances of loan approval at favourable terms.
- How can I improve my CIBIL score?
To improve your CIBIL score, make timely payments, maintain a low credit utilisation ratio, avoid applying for multiple loans simultaneously, and regularly review your credit report for errors.
- How long does it take for my CIBIL score to improve?
The time it takes for your CIBIL score to improve depends on various factors, such as the severity of negative items on your report and your credit behaviour. Consistent positive actions can gradually enhance your score over time.
- Can I get a personal loan with a low CIBIL score?
While a low CIBIL score can make it challenging to secure a personal loan, some lenders specialise in offering loans to individuals with less-than-perfect credit scores. However, these loans may come with higher interest rates.
- How often should I check my CIBIL score?
It’s recommended to check your CIBIL score at least once a year. This allows you to monitor your credit health and identify any potential issues or errors in your credit report.
