When it comes to personal finance, your CIBIL score plays a crucial role in determining your creditworthiness. However, several myths and misconceptions surround CIBIL scores, leading many individuals to make financial decisions based on inaccurate information. At SoniMoney.com, we aim to provide clarity by debunking these common myths to help you make informed financial decisions.
Fact: Many people believe that checking their CIBIL score often can lower it. This is not true. Checking your own credit score is considered a “soft inquiry” and does not impact your score. However, when a lender checks your score as part of a loan application, it is a “hard inquiry,” which can slightly affect your score.
Fact: Your income level does not directly impact your CIBIL score. The score is calculated based on your credit history, repayment behavior, credit utilization ratio, and the types of credit you use. Even if you earn a high salary, missing payments or maxing out your credit cards can negatively affect your score.
Fact: Closing old credit cards can actually hurt your CIBIL score. Older credit accounts contribute to your credit history length, which is an important factor in your score. If the card has a good repayment history, it’s better to keep it active.
Fact: Even one late payment can have a significant impact on your CIBIL score. Timely repayment history accounts for 35% of your credit score. Always ensure your payments are made on or before the due date to maintain a healthy score.
Fact: While a score of 750 or above is generally considered good, it doesn’t guarantee loan approval. Lenders also assess your income stability, employment history, and existing debts before approving a loan.
Fact: Improving a low CIBIL score is entirely possible. By paying off outstanding debts, reducing your credit utilization, and maintaining timely repayments, you can gradually boost your score. Patience and consistent effort are key.
Fact: If you have a joint loan and the co-borrower defaults on payments, it will reflect in both of your credit reports. It’s essential to monitor joint loans closely and ensure all payments are made on time.
By understanding the truths about your CIBIL score, you can avoid falling into the trap of myths and work towards achieving a strong financial profile. For more expert financial advice and loan-related services, visit SoniMoney.com.
Tags: CIBIL score myths, improve CIBIL score, personal finance tips, credit score facts, SoniMoney loans
