11 Common Myths about CIBIL Score

5paisa Research Team Date: 08 Feb, 2024 02:53 PM IST


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You must be planning to apply for a loan, for which you have to keep an eye on your credit report. The credit or CIBIL score is an essential factor that determines your creditworthiness or financial health. You may wonder why you need a good CIBIL score. It is necessary when you are applying for a loan or credit card. 

The credit score is a three-digit number showing your creditworthiness. The higher the score, the higher will be your chance of qualifying for a loan or credit card. That is why it is always advisable that you maintain a good CIBIL score by repaying your past loans or debts. This will help to avoid ruining your CIBIL credit score. 

Credit history, which includes the quantity and kind of credit accounts, total amount of debt, payment history, etc., is the foundation of a credit score. Credit ratings assist lenders in determining a borrower's ability to make timely loan repayments. Many myths about CIBIL score regarding credit scores exist in the public domain as a result of ignorance. Therefore, you must debunk the 11 common myths about CIBIL score you may have

Major Myths about CIBIL Score

While the term 'CIBIL Score' has been in existence for quite some time, there remains a lack of clarity regarding its concept among people. Consequently, myths about CIBIL score surrounding CIBIL or credit scores persist. It is acceptable as long as one doesn't buy into these myths about CIBIL score; however, believing in them can lead to issues.

Given the common misunderstandings surrounding CIBIL or credit scores, this article aims to address and debunk 11 common myths about CIBIL score, providing a reality check on each.

Myth 1: Checking Credit Report Regularly Can Impact Your Score

This is among the most common myths about CIBIL score. You can review your credit report without concern for any impact on your credit score. While multiple inquiries from lenders in a brief period may marginally decrease your score, it's advisable to check your credit score regularly. This practice allows you to pinpoint areas for improvement, ultimately boosting your credit or CIBIL score.

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

Your credit score is established from your credit report, which does not include any information about your income. Regardless of earning a substantial annual income, if your credit behavior is not deemed creditworthy, your credit score will be adversely affected.

Myth 3: Poor CIBIL Score Means No Loan

The approval of a loan application is not solely contingent on an individual's credit score. Numerous other factors, including the applicant's income, the credit score of a co-applicant, the applicant's market reputation, etc., significantly influence the outcome of the approval process. However, individuals with a low credit score may still secure credit, albeit at a higher interest rate. Additionally, those with less-than-ideal credit scores have the option to obtain loans from peer-to-peer (P2P) platforms.

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

The use of debit cards does not contribute to the establishment of your credit history or the attainment of a credit score. As a means to access your savings account balance, a debit card lacks credit-related functionality. Transactions conducted with a debit card do not factor into the development of your credit history or credit score. To initiate your credit history, it is necessary to acquire a credit card or a loan. Once your credit history is established, your credit score will be generated. However, the transition from a status of "NA" (No Activity) to an actual score may take several months.

Myth 5: Closing Old Accounts Can Boost Your Credit Score

There is a common misconception that maintaining more than two credit cards can negatively impact one's credit score. Consequently, some individuals opt to close older, unused credit accounts to mitigate this perceived risk. However, this strategy may have unintended consequences, as closing an old credit account shortens your credit history. A more extended credit history provides lenders with a comprehensive understanding of your credit behavior. If, however, there are concerns about the responsible use of a credit card, careful analysis should precede any decision to close the card.

Myth 6: Your Marital Status Affects Your Credit Score

Whether you are married or unmarried, your credit score remains unaffected. Marriage does not have any impact on your credit score as it is an individual entity. However, if you choose to apply for a loan or another credit product jointly, the credit scores of both individuals may be influenced. CIBIL or credit scores primarily rely on an individual's financial behavior and are entirely unrelated to marital status. Combining credit scores is not feasible. Regardless of marital status, credit scores are determined based on individual financial conduct. Joint bank accounts have no bearing on your credit score.

Myth 7: Anyone Can Check My CIBIL Score

This is one of the prevalent myths about CIBIL score. Only the individual or the financial institution, with the borrower's authorization, can access a person's credit score.

Myth 8: Applying for New Credit is Bad for Your Credit Score

It's important to understand these myths about CIBIL score. Seeking a new credit facility won't impact your credit score, provided you avoid applying to multiple lenders within a brief timeframe. Each application to a lender triggers an inquiry on your credit report. Multiple inquiries may convey a sense of financial desperation, resulting in a lower score. Opting for a credit facility from a reputable lender instead of applying to numerous institutions will not negatively affect your credit score.

Myth 9: A Good CIBIL Score Stands for a Loan with Lower Interest Rates

In the process of a loan application, the lender considers various factors, including the borrower's income, age, and past credit history, not solely relying on the CIBIL score. If the lender finds dissatisfaction with the overall credit behavior, there is a possibility of either rejecting the application or proposing higher interest rates.

Myth 10: Clearing Off Debt Will Remove the Transaction from Your Credit Report

This is one of the common myths about CIBIL score. Avoid assuming that settling a debt will completely erase the transaction from your credit history; instead, it will linger on your credit report for years, influencing your CIBIL or credit score. It's important to note that adverse information can persist on your report for up to 7 years, while details related to bankruptcy can endure for an extensive period of 10 years.

Myth 11: Zero Credit is the Real Deal

Not exactly. When you submit applications for credit cards or loans, lenders evaluate you based on your credit history. Consequently, having no credit history is not considered ideal or advantageous. If your credit history is less than six months old, your credit score will register as zero (0).

This occurs because the credit reporting bureau lacks sufficient information to evaluate your credit history and assign a credit score. Building a credit history takes time, so if you are new to credit and have recently acquired your first loan, credit card, or other form of credit, you might observe a credit score of zero (0) on your report.


Gaining a clear understanding of the truths behind credit scores is crucial for effectively managing your financial well-being. It's more than just a numerical value; it signifies your financial credibility. By debunking these myths about CIBIL score, we aim to empower you to make informed decisions regarding your credit.

Keep in mind it's not solely about the score; it's about your approach to handling financial obligations. Regularly monitor your credit, ensure timely payments, and work towards achieving financial stability. Your credit score serves as a mirror reflecting your financial habits and responsibility.

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Frequently Asked Questions

Examining your own CIBIL score is categorized as a "soft inquiry" and does not adversely affect your credit score. On the other hand, if a lender or credit card issuer requests CIBIL to assess your credit report, typically when considering you for a loan or credit card, it is deemed a "hard inquiry."

Various factors can impact an individual's CIBIL score, including elements such as income, age, and job stability.

Not all loans and debts are equal in impacting your CIBIL score. The type, amount, and repayment history of each debt contribute differently to your credit score.