It is important to maintain a high CIBIL score for those who are planning to take a loan or some credit. CIBIL score is the direct reflection of a person’s credit history and is one of the most trusted measures by financial institutions to find out the reliability of a borrower.
It is a three-digit numeric summary that ranges from 300 to 900. The higher your CIBIL score, the higher will be the chances to get your loans approved. However, there is still much confusion among people about the CIBIL score. To clear concepts about the CIBIL score know about the myths and facts as stated on the cibil website.
MYTH: Low CIBIL score means no loan
People often get worried by knowing about their low CIBIL score as it is often assumed that a low CIBIL score would mean a person would never be able to get a loan or credit card. There might be some banks and financial institutions that will not lend to people having low CIBIL scores. Explore some options, there might be some banks that lend to people with a less CIBIL score. However, they might charge higher interest rates on such loans.
Myth: Income, investment, and assets impact CIBIL score
As mentioned earlier, the CIBIL score is the reflection only of a person’s credit history. Which means, it remains unaffected by a person’s income, investment, and assets. CIBIL ratings are impacted by a person’s loan history, credit card bills, and repayment history.
Myth: A bounced check can ruin the CIBIL score
As the CIBIL score has nothing to do with a person’s savings or investment, it will remain unaffected if your savings account’s check is bounced. However, if you miss an EMI or another instalment of a loan, then your CIBIL score can reduce.
MYTH: CIBIL keeps a record of defaulters
If you are on CIBIL’s list of creditors, don’t worry because CIBIL has details of nearly everyone who has taken a loan or credit from financial institutions. That means if a person is regular in paying instalments, even then his name will be with CIBIL. It is the job of CIBIL to collect and maintain the data of all the creditors.
Myth: Checking CIBIL Score & report will reduce credit score
There is a common perception among people that requesting a CIBIL report or credit score is an indication of taking a new loan. That’s why people often think that unnecessarily checking CIBIL score can reduce their credit scores. However, CIBIL Report doesn’t reflect the CIBIL enquiry made by the applicant. So it is not possible to know how many times a person has requested for CIBIL report. Rather, regular checking of CIBIL report status is a good practice.
Myth: Prefer cash over credit
If you are constantly following this myth to save your CIBIL score from any harm, then actually you are hindering its improvement. There won’t be any credit history if you have never availed of any credit despite having a credit card. Credit history enables lenders to identify the risk and capabilities of a borrower to repay the loan amount.
The website also cautions people to use cash if they overspend. Credit cards charge a high-interest rate leading to the accumulation of large debt amounts in case of failure to repayment on time. In this case, any kind of default might create a problem in sanctioning a loan.
Myth: CIBIL is only for helping banks and financial institutions
Fact: It is a credit rating agency that not only helps lenders in assessing the reliability of creditors but also spreads awareness among people about their expenditures. This will ultimately help them in becoming more credit disciplined.
Myth: CIBIL can make corrections in CIBIL report directly
If a person wants to get some corrections done in his CIBIL report, then it is better to contact his respective bank or other financial institutions rather than directly approaching CIBIL. It is not in the authority of making changes or corrections in a lender’s CIBIL report directly. Corrections in the CIBIL report need to be initiated by the respective banks. However, it can help in initiating the process.