Improve Your CIBIL Score

7 Common CIBIL Myths Busted With CIBIL Facts

It’s Important to Separate CIBIL Myths From CIBIL Facts

Cibil-logo-what-is-cibilIgnorance is bliss, or so we are told. But not when the subject is your CIBIL Score. Ignorance here can hurt you financially—and hurt you badly.

Busted below are 7 common myths about CIBIL, so that you’ve your facts straight about this all-important report card.

Myth #1: My name is with CIBIL. That means I am regarded as a defaulter

CIBIL Fact: Every financial institution is required to share a report of all individuals with CIBIL every month. Therefore, CIBIL will have your repayment data if you’ve taken out a loan. But, obviously, that doesn’t mean you are a defaulter.

Myth #2: My investments affect my credit score, as does my assets and income

CIBIL Fact: Your CIBIL Report tracks your credit history till date and shows how you are in repaying credit. Your assets, bank account status, monthly income, and investment have got absolutely nothing to with your CIBIL Score.

Myth #3: CIBIL provides no value to me; it is useful to financial institutions only

CIBIL Fact: That CIBIL helps financial instructions to make an informed decision when evaluating an application for loan or a credit card is true. What is not true, however, is that it doesn’t provide any benefit to individuals.

It provides as much value to an individual as to a bank or any other financial institution. Knowing your CIBIL Score and how it is affected help you gain faster loan approvals and better terms on your loans as well as maintain financial discipline.

Myth #4: Paying in cash always is better than using credit cards or loans

CIBIL Fact: The debate of cash Vs credit card has many angles to it, but here we are concerned with how they play out on your CIBIL report, and in turn affect your loan application.

Using cash always doesn’t have any bearing on your CIBIL report (The CIBIL report, as told above, contains your credit history only.). So when you apply for a loan, the bank will not have any reference to check your payment history and will rely on factors like your salary, age, etc. to evaluate your loan application.

Using a credit card and paying your bills on time over a period of time helps you build your credit history. Now when you submit a loan application, the bank can see that you’ve a history of responsibly managing your finances, and so will be more likely to grant you a loan at good terms.

Myth #5: My CIBIL score is low and that means I can’t get a loan

CIBIL Fact: Different banks have different lending score bandwidth. Even when your loan application has been rejected by a few banks because of a below par CIBIL score, some other bank may accept it. However, invariably, a low score means higher interest rates and charges.

Myth #6: CIBIL can directly make corrections in my credit report

CIBIL Fact: CIBIL collects data and prepares your report, but it cannot make any changes to it on its own. Whatever change needs to be made has to be initiated and/or approved by the relevant financial institutions before CIBIL can update your report.

Myth #7: A bounced cheque negatively affects my report 

CIBIL Fact: Your CIBIL report doesn’t take into account the details of your current or savings account. Therefore, a bounced cheque, in itself, has no bearing whatsoever on your score. However, if you miss an installment payment because of a bounced cheque, for sure your report will be negatively affected.

Myth #8: Utility bills affect CIBIL score?

CIBIL Fact: As of yet, payment of utility bills do not affect a person’s CIBIL score. While there have been talks for inclusion of payment history of telephone bills, no new entry in the list of things affecting the CIBIL has been yet made. It is likely that in future utility bills may also be reported on the CIBIL report, but for now only these three payments are reported in it:

  • Payment of credit card bills
  • Payment of EMIs of secured (e.g. car loan, house loan) as well as unsecured loans (e.g. personal loans)


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