In today’s financial ecosystem, the CIBIL score is one of the most crucial factors that affect your creditworthiness. Because of its very important nature, various misconceptions circle around this three-digit figure since many people disagree with it and neither bother to know it nor understand it. Probably, the most general myth is the assumption that checking the CIBIL score might lower it, but that’s far from the truth. Having a free CIBIL score check can help you keep informed about your financial health without having any negative impact on it.
Let’s debunk a few of the biggest myths about CIBIL score checks, and let’s see why regular free checks are crucial for maintaining a healthy credit profile.
Myth #1: The more you check your CIBIL score, the lower it becomes
One such myth that has been carried through all these years is that frequent checking of your CIBIL score lowers it. When you check it yourself, that is counted as a soft inquiry, which does not affect it at all. It is only the hard inquiries that occur when lenders check your credit for loan applications that may have a slightly negative impact on your score.
Note that checking through free CIBIL scores is safe as part of monitoring your credit, using reliable platforms such as Stashfin, since no major negative impacts are formed.
Myth #2: CIBIL is the only source of Credit Scores
While “CIBIL score” is commonly used to mean “credit score,” CIBIL is not the only credit bureau in India. Other approved credit bureaus, such as Experian and Equifax also provide credit reports. Each of them has their proprietary formula to arrive at the score, leading to minor differences.
Myth #3: A Low CIBIL Score Lasts Forever
The third most persistent myth is that a low CIBIL score is permanent. It improves with time with good financial behavior, which is derived through timely repayments and low utilisations. A free CIBIL score check provides insight into those improvements, thereby making it easy to track your progress and even make corrective actions wherever required.
Myth #4: A Low CIBIL Score Means No Loan
A low CIBIL does not favor or, rather, make your loan sanctioning easy, but neither does that score make it impossible. The lenders consider your income, employment history, and debt-to-income ratio, among others, along with your CIBIL score. Regular access to the facilities of free check keeps you updated so that, over time, you can make necessary preparations and improve your credit profile accordingly ahead of any loan application.
Myth #5: Income Directly Affects Your CIBIL Score
The CIBIL score is irrelevant to your income. The scores are derived from credit behavior: timely payments, loan outstanding, and credit utilization. Even if you draw a very high salary, poor debt repayments will hurt your credit score.
Myth #6: Credit is built using a debit card
Many people believe that with the help of debit cards, they might boost their CIBIL score, which is again wrong. Debit cards access funds in your bank account, without extending credit, so they don’t affect your score. For a good credit history, try using a credit card or taking a small loan on credit. Regular free CIBIL score checks allow you to follow through with your progress while building responsible credit.
Myth #7: Closing Old Accounts Boosts Your CIBIL Score
Closing old accounts hurts your credit scores much of the time because it reduces your credit history. A very long-standing account with a positive payment history is a prized possession in your credit profile. Check your CIBIL report before you actually decide to close any of the credit accounts, to understand the impact this move might have on your credit history and score.
Myth #8: Paying off debt wipes it off your report
Paying off a debt simply closes that debt, but the same stays on your credit report for several years. Regular use of free CIBIL score checks helps you ensure that all debts are correctly recorded in your report with their statuses while you get to view the reflection of timely repayments on your credit score.
Myth #9: Having No Credit is Good for Your Score
Some people believe that having no credit history is the best scenario, but lenders generally prefer applicants with a solid credit record. Where there is no credit history, it becomes challenging for lenders to estimate your creditworthiness.
Myth # 10: Everybody gets to see your CIBIL Score
Access to it is fully restricted to you and other entities authorized for the same, like banks and other financial institutions, and that too only with your permission. This very myth has built up a general privacy issue in peoples’ minds; be assured, your information is safe. When you use any CIBIL score check platform, such as Stashfin, it maintains your data on a private note while still empowering you fully in your financial health.
Myth #11: Applying for New Credit Damages Your Score
Applying for credit does not naturally lower your score; however, submitting multiple applications for credit products in a very short time certainly lowers your credit score since that means many hard inquiries on the part of lenders.
Myth #12: A High CIBIL Score Guarantees Loan Approval
Though a high CIBIL score bodes well for an individual, it is not a surety that the loan would be granted. They look at other factors, too, like one’s income and stability of employment aside from other financial obligations. Keeping a good CIBIL score by practicing responsible credit usage will just give you a greater chance but does not solely determine it.
Myth#13: Paying Only the Minimum on Credit Cards Helps Your Score
Paying the minimum prevents any defaults, but over time, it grows your debt due to the accumulation of interest. The high credit utilization catapults from carrying large balances that may damage your credit score. Tracking your debt level reminds you of the trend in how credit card use is affecting your score.
Myth #14: You don’t need to check your CIBIL score if the credit is good
Even with a good score, you need to check it regularly. Mistakes or incorrect information on your report may negatively affect your scores without your knowledge.
Endnote
These debunked myths bring forth the importance of regular checks on your CIBIL score. Free CIBIL score checks will always keep you informed, stay away from any potential financial pitfalls, and proactively improve your credit profile. Using platforms like Stashfin, you can access your credit score and report without impacting your score, ensuring that you’re always one step ahead in managing your financial health. Remember, knowledge is power, and when it comes to finance, your understanding and monitoring of the CIBIL score will be the key to securing your future.
