Common Myths and Misconceptions About Credit Scores and CIBIL

A credit score is a crucial parameter in determining your financial reliability. Even if you use the best credit card in India, a credit score can gravely impact your creditworthiness if not managed properly. Use a reliable credit card app to calculate your credit score. 

At the same time, CIBIL (Credit Information Bureau of India Limited) is one of the country’s most reputed credit information companies. It was founded in 2009 to secure sustainable credit growth in the country. Like CIBIL, there are other companies too, that calculate your credit score. However, CIBIL is the most popular and is surrounded by many myths, much like the concept of credit score. It’s time to lay these myths and misconceptions to rest and face the facts.

Common Myths Concerning the Credit Scores and CIBIL

An individual may use the best credit card in India but still carry some misconceptions concerning credit scores and CIBIL. Here are some common myths you should prevent believing in:

If You Check Your Credit Score Regularly, It Falls.

Even people using the most secure and popular credit card app ask, ‘Does checking my credit score make it fall?’ However, that’s not true. Regularly checking your credit score does not cause it to fall. It helps you to maintain track of your financial activities and mistakes. You can keep checking your credit score regularly and take action to improve it.

Carrying a Good Balance on Your Credit Card Will Enhance Your Credit Score.

It is another misconception that people carry around even after experiencing the use of the best credit card in India. Those who carry a credit card and use it regularly must know that having an outstanding balance on your credit card will adversely affect your credit score. Instead, you should pay your credit card bills on or before the due dates. Also, maintain a low credit utilization rate to enhance your credit score.

Credit Score is the Sole Factor Considered in Loan Approvals.

Whether you are a user of the best credit card in India or not, it is common knowledge that a credit score has an important role in your loan approval process. However, it is not the sole factor determining the loan’s approval. Many other factors, like your occupation, age, nature of loan, tenure, etc., also impact the approval process.

CIBIL Keeps a List of Credit Defaulters.

Any person who has applied for a loan or a credit card may be able to find their credit history on CIBIL. But, it is wrongly presumed that CIBIL also holds and maintains a list of credit defaulters. It is not true, as CIBIL just accumulates individual information on your credit history to help you and lenders make informed decisions. 

CIBIL is Meant for Assisting Banks Only.

CIBIL is meant to help banks and financial institutions with credit reports and scores. But it is also open for customers to check their credit scores and maintain financial discipline, improving their chances at loan approval. Customers can also avoid rejections by preventing making an application in case of a low credit score on CIBIL. 

Low CIBIL Score Damages Financial Reputation Forever.

CIBIL scores are subject to change with a change in your financial dealings. You have a fair opportunity to improve your CIBIL credit score by taking appropriate measures. It will lead to an increase in your financial credibility. Also, banks and financial institutions usually check the latest updated information. So, keep your credit history healthy, especially near a loan application.

Factors to Consider To Prevent A Low Credit Score

Even using the best credit card in India does not guarantee an optimum credit score. Thus, here are a few factors that you must consider to dodge a low credit score:

• In the case of co-signing loans with your close acquaintances, first, ensure their capability of making the payments. In case of any default on their side, your credit score may get affected.
• Although unsecured loans come without any need for collaterals, avoid obtaining multiple unsecured loans. It will put you in too much debt, lowering your credit score.
• Even if you own the best credit card in India, avoid applying for multiple loan applications simultaneously, as it will appear on your credit report and negatively impact the lenders, lowering your credit score and negotiating powers.

Conclusion

If you are looking forward to evaluating your credit score, do not pay heed to preconceived notions. Always believe in facts and refer to information on a verified website or credit card app. Although you may use the best credit card in India, avoid making mistakes that may disrupt your credit score. Whatever steps you take in financial management, always closely check your credit scores and ensure a seamless financial trajectory.