Your CIBIL score is one of the most important factors banks consider before approving loans or credit cards. In India, this score ranges from 300 to 900, and the closer your score is to 900, the stronger your credit profile appears to lenders.
Despite being a key part of the financial
system for many years, there are still several misunderstandings around how it
actually works. Let’s explore some common myths about CIBIL score and
understand the truth behind them.
1.
Checking Your Own Score Will Reduce It
One of the most common myths about CIBIL
score is that checking it yourself can lower the number. In reality, when
you check your own credit score, it is recorded as a soft inquiry. Soft
checks do not affect your credit score at all, so you can review your report
whenever you want.
2.
Higher Income Means a Better Score
Many people assume that earning a higher
salary automatically leads to a better credit score. However, income is not a
factor in credit score calculation. What truly matters is your repayment
behavior, how consistently you pay bills on time, and how responsibly you use
credit.
3.
Closing Old Credit Cards Improves Your Score
Another one of the common myths about CIBIL
score is that closing older credit cards helps improve your credit profile.
The truth is that older accounts show a longer credit history, which is
beneficial. Closing them may shorten your credit history and can slightly
affect your score.
4.
Only Loan EMIs Affect Your Credit Record
Some people believe that missing loan EMIs is
the only thing that harms a credit score. In reality, late credit card payments
or delayed bill payments can also negatively impact your credit history.
5.
You Must Take a Loan to Build Credit
Many assume that without a loan, it is
impossible to build a credit history. This is another misconception.
Responsible use of a credit card, combined with timely payments, can also help
establish a strong credit profile.
6.
Paying the Minimum Credit Card Amount Is Enough
Among the common myths about CIBIL score,
this one often leads to financial trouble. Paying only the minimum due keeps
your account active, but the remaining balance continues to accumulate
interest. Over time, this increases debt and may indirectly impact your credit
health.
7.
Joint Loans Don’t Affect Your Score
If you are a co-borrower or guarantor on a
loan, you share equal responsibility for repayment. If the other borrower
misses payments, it will still appear on your credit record and may lower your
score.
8.
Loan Settlement Improves Your Credit Profile
Some borrowers think settling a loan instead
of repaying it fully is a good option for their credit score. In reality, a
loan marked as “settled” means the full amount was not paid. This status can
make lenders cautious when reviewing future credit applications.
9.
Not Using Credit Means a Good Score
Avoiding credit entirely does not guarantee a strong credit score. If you have never used credit, lenders have no repayment history to evaluate. This makes it harder for them to assess your creditworthiness.
10.
Applying for Many Loans Doesn’t Matter
A very common misunderstanding is that
multiple loan applications have no effect on your score. Each application
results in a hard inquiry, and too many inquiries within a short period
may signal financial stress to lenders.
11.
Credit Utilization Doesn’t Matter
Credit utilization refers to how much of your
available credit limit you are using. High utilization may indicate financial
pressure. Financial experts generally suggest keeping credit usage below 30–40%
of your available limit.
12. Credit Reports Are Always Perfect
Another one of the common myths about CIBIL
score is that credit reports never contain errors. In reality, mistakes can
occasionally appear in credit reports. Reviewing your report regularly helps
you identify and correct any inaccuracies.
13. Lenders Only Look at Your CIBIL Score
While your credit score is important, lenders
also consider other factors such as income level, job stability, existing
debts, and repayment capacity before approving credit.
Final Thoughts
Understanding the common myths about CIBIL
score can help you manage your finances more effectively. Building a strong
credit score doesn’t require complicated strategies—it mainly depends on simple
habits like paying bills on time, keeping credit usage under control, and avoiding
unnecessary borrowing.
With consistent financial discipline, your
credit profile can gradually improve, making it easier to get approvals for
loans, credit cards, and other financial opportunities in the future.
