Due to a lack of adequate knowledge, most people often find it difficult to differentiate the validity and applicability of myths about the CIBIL scores and general rumors. However, many credit score misconceptions still surround the CIBIL Score, which needs to be addressed to help you understand the fundamental factors that decide your actual credit health. Understanding credit score myths and facts is the first step toward financial stability. Hence, here is a compiled list to debunk credit score misinformation and provide a reality check on common credit score myths.
Checking Your Credit Report Damages Your Score
One of the most common myths about credit scores is that looking at your own report hurts you. In reality, checking your own report is a soft inquiry and wouldn’t hurt your CIBIL score at all. The confusion often stems from the difference between a soft inquiry and a hard inquiry. When multiple lenders inquire about your credit information within a short span of time (hard inquiries), it could damage your score and give the prospective lender the wrong impression. In fact, it is a good practice to keep track of credit report errors by checking your score once in three to six months.
A Poor Credit Score Stays Forever
A credit score is a snapshot of your payment history and repayment behavior. Once you get a low ranking, it doesn’t mean it will stay with you for a lifetime. In fact, you can attempt to improve your CIBIL score standings by following all the good practices and guidelines. Furthermore, you can approach professional credit repair services designed for a credit repair individual to get more insights on how to fix your profile and build a positive credit history.
Your Credit Score Depends on Your Assets and Annual Income
In general, your CIBIL score depends on how many credit accounts you have and how well you handle them, not on your annual income and assets. For example, if your annual income is ₹10 lakh but you have never used a credit card or taken a loan, you may not have a score at all. In reference, you may have a ₹5 lakh annual income and a well-managed credit card with a low credit utilization ratio, which will lead to a strong credit score.
When You Get Married, Your Scores Merge
Among the various credit score myths, the idea of “joint scores” is very common. In fact, there is no such thing as merging credit scores. Whatever your marital status is, scores are calculated according to individual financial history. Joint bank accounts won’t affect your record, whereas joint loan accounts will impact your individual score.
Debit Card Impacts Your CIBIL Score
Debit cards don’t help build your credit history. Because a debit card is a tool for accessing your savings account balance and does not involve borrowing, any debit card purchases will not be considered when calculating your score. Credit is most associated with borrowed funds and their timely repayment, not your existing bank balance.
Applying for Multiple Loans Damages Your CIBIL Score
Many people assume that applying for loans from several lenders increases the probability of approval. However, every time you apply, the lender performs a “hard inquiry,” which adversely affects your CIBIL ratings. To maintain good credit health, ensure that you do not apply for loans from different lenders at the same time.
Zero Credit History is Ideal
Not exactly. When you’re a first-time borrower, you won’t have a credit ranking. Usually, lenders look for responsible credit behavior and a proven track record rather than zero credit history. A clean history of managing debt is the ideal scenario for loan approval.
Paying off delinquent Debts Will Remove the Transaction from Your Credit Report
Do not be under the misconception that paying off a delinquent debt would erase the transaction from your history. While debt recovery is a positive step, the record of the delinquency will remain within your credit history for years. These entries show lenders how you have handled your debts in the past and influence the final approval of your loan.
Approaching a CIBIL Score Repair Agency may Improve Your Score
When searching for ways to debunk credit score myths, you may find various “credit repair agencies.” Some people mistake these for firms that can fix a low score overnight for a fee.
However, a legitimate credit repair agency helps you file disputes if you find credit report errors. These mistakes can range from a misspelling of your name to an incorrect transaction. If you don’t have the resources to dispute these mistakes yourself, professional credit repair services supporting both a credit repair business can correct those errors on your behalf to help improve CIBIL score accuracy.
Frequently Asked Questions (FAQs)
1. Does checking my own credit score lower it?
No, checking your own credit score is considered a soft inquiry, which has no impact on your score. It is only when lenders check your report for a loan application (hard inquiry) that your score might experience a minor, temporary dip. Regularly monitoring your report is actually a great way to maintain credit health.
2. Can credit repair services instantly fix my CIBIL score?
No agency can “delete” legitimate negative information or provide an overnight fix. Professional credit repair services work by identifying credit report errors, such as incorrect personal details or wrongly reported defaults, and helping you dispute them with the credit bureaus to improve CIBIL score accuracy.
3. Does my salary or bank balance affect my credit score?
This is one of the most common credit score misconceptions. Your annual income, assets, and bank balance are not included in your credit report. Your score is primarily calculated based on your payment history, total debt, and credit utilization, not how much money you earn.
4. Will closing an old credit card help debunk credit score myths and improve my rating?
Actually, closing an old credit card can often hurt your score. It reduces your total available credit (increasing your credit utilization ratio) and shortens your credit history. Keeping old accounts open and active is generally better for your long-term credit health.
5. How long does a late payment stay on my credit report?
Even after debt recovery or paying off a delinquent account, the record of the late payment typically remains on your credit report for up to seven years. However, its impact on your score decreases over time as you build a more recent history of consistent, on-time payments.
6. Do debit cards help in building a CIBIL score?
No. Since debit cards use your own deposited funds and do not involve borrowing, they do not contribute to your credit history. To improve your CIBIL score, you must manage credit-based products like credit cards or loans responsibly.
