What are Myths about CIBIL Score?

Sometimes given the nature and importance of CIBIL in providing credit score, people often create misconceptions about it in their mind or believe in rumours, while CIBIL is very transparent when it comes to creating credit reports. Here are some common myths about CIBIL.

1. CIBIL Keeps a Record of all Defaulters

CIBIL refers the financial facts submitted by banks or lenders, the latter maintain the record than CIBIL. It is based on these records a credit score is assigned. If you default in payments or likewise, you need to connect with respective institute for the details of the same and not CIBIL.

2. CIBIL has Complete Authority to Fix Credit Report Errors

The CIBIL cannot make changes to your credit report until approved by the respective financial institution or bank. However, CIBIL can facilitate the process.

3. Investments/Assets Affect Credit Score

Details of credit cards and loans are only the factors that affect credit score, and not your investments or assets such as current or savings account etc. Bounced cheques do not affect your CIBIL score, but missed credit card payment or EMI may adversely hit the score.

4. Zero Credit Score is Good

Banks often trust the ones who have had a sound credit history than none at all. Even if you do not take loans or bear a credit history, you can be rejected as an applicant for loans. Thus, zero credit score is not ideal. You can start with utilizing credit cards or take a small cash loan to generate some credit imprint.

5. Banks and Financial Bodies Influence CIBIL

NBFCs, banks or lenders have no say in deciding your credit score. These only consider your credit score from CIBIL to approve credit card or loan application.

6. Low Credit Score Signifies No Credit Card or Loan Approval

You will find institutes that lend money even if your credit score is low. However, the loan policy would be very strict and there is a great chance of encountering high interest rate charges. However, you may still be able to get a loan.

7. Credit Score is the Only Factor for Judging your Loan Application

When evaluating a loan application, the bank considers a lot many factors than just CIBIL. If you do not have a good credit record as of now due to some genuine reasons, but still retain a great repayment capacity or ready to offer collateral then the lender may still approve your loan application.