10 Biggest CIBIL Score Myths Indians Still Believe (and the Truth)

There is a lot of misinformation and confusion surrounding CIBIL scores in India. Believing these myths can lead to poor financial decisions and hurt your credit health.

Here are 10 of the biggest CIBIL score myths and the actual truth behind them.

Myth 1: Checking my own CIBIL score reduces it.

TRUTH: This is completely false. When you check your own credit score, it is considered a "Soft Enquiry." Soft enquiries have no impact on your score. You can and should check your score regularly to monitor your credit health.

A "Hard Enquiry," which occurs when a lender or bank checks your score after you apply for a loan or credit card, is what can slightly lower your score.

Myth 2: "Settled" loans are removed after a few months.

TRUTH: A "Settled" status on your report is a major negative factor. It means you did not pay the full amount owed to the lender. This status stays on your CIBIL report for 7 years and significantly lowers your score and chances of getting future loans.

Myth 3: Paying the "Minimum Amount Due" on my credit card is enough.

TRUTH: Paying only the minimum due is a dangerous habit. While it saves you from late payment penalties, the remaining unpaid amount accrues very high interest (often 35-45% annually). It also leads to a high Credit Utilization Ratio, which hurts your CIBIL score. Always aim to pay the full bill amount.

Myth 4: My CIBIL score will improve on its own over time.

TRUTH: A CIBIL score does not improve automatically with time. It only improves with positive and consistent financial actions, such as:

• Making all payments on time.
• Keeping your credit utilization low.
• Correcting errors on your report.

Myth 5: Closing an old credit card will increase my score.

TRUTH: This can actually reduce your score. Closing an old credit card shortens your "Average Age of Credit History." A longer credit history is generally better for your score. It's better to keep your oldest card active, even with minimal use.

Myth 6: My score is the same across all credit bureaus (CIBIL, Experian, Equifax).

TRUTH: Each credit bureau has its own proprietary algorithm for calculating scores. While they are generally based on the same data from lenders, the final scores can vary slightly. It's a good practice to check your report from all major bureaus.

Myth 7: Paying an EMI before the due date boosts my score.

TRUTH: Paying early is great for financial discipline, but it doesn't give you any extra points. As long as the payment is made by the due date, it is considered "on-time." The CIBIL system only tracks whether a payment was made on time or not.

Myth 8: CIBIL has the power to change my score.

TRUTH: CIBIL is a credit information company; it only collects and compiles the data provided by banks and financial institutions. CIBIL does not have the authority to change any information on its own. Only your lenders (banks/NBFCs) can submit updated or corrected information to CIBIL.

Myth 9: My CIBIL score depends on my income or savings.

TRUTH: Your CIBIL score is a reflection of your credit behavior, not your wealth. It is based on your repayment history, credit utilization, and credit mix. A person with a lower income can have a higher CIBIL score than a person with a high income if their credit management is better.

Myth 10: Credit repair agencies can magically fix a bad score.

TRUTH: There is no magic fix. "Credit repair" is simply the process of identifying and correcting errors on your report and building a positive payment history. While professional agencies can guide you through the dispute process and provide a strategy, they cannot do anything that you cannot do yourself. The process always requires documentation and cooperation from the lenders.

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