A credit score is one of the parameters in the eligibility criteria based on which lenders extend a Home Loan to prospective homebuyers. Hence, it is important to know what it is, what factors affect it, and most importantly, the common myths about the CIBIL score.
A credit score is a 3-digit numeric value that shows your creditworthiness. The higher the score, the better for the borrower in terms of loan amount available and interest rate. A credit score is based on credit history, that is your financial behaviour, the number and types of credit accounts, total debt, repayment history etc. Credit scores help lenders analyse the ability of an individual to repay the loans on time.
There are many myths and misconceptions about credit scores. Read this article to avoid any discrepancies in your financial planning as we debunk the myths related to credit scores.
Debunking Common Myths about CIBIL Score
Myth #1 Checking Credit Report Hurts Your Score
One of the most common misconceptions is that checking your credit score frequently affects it while in reality, it doesn’t. When someone checks their CIBIL score, an inquiry is generated. The inquiries are of two types:
- When a customer checks their own CIBIL score, it is termed as a soft inquiry.
- When lenders, banks, or financial institutions request CIBIL to check a customer’s score, it is termed as a hard inquiry.
When you apply for a loan, lenders pull your credit report to check your creditworthiness. Applying for multiple loans simultaneously can affect your credit score negatively. However soft inquiries do not affect your CIBL score. In fact, it's important to check your credit report regularly to ensure its accuracy and identify any errors or discrepancies. It is a healthy practice to keep track of your credit report and score at regular intervals of time and monitor it to gauge if you need to improve your score.
Also Read: 7 Tips to Help You Improve Your CIBIL Score
Myth #2 CIBIL is the Only Source for Getting Credit Scores/Report
Each credit bureau has its own methodology for calculating credit scores. People usually use the terms ‘CIBIL Score’ and ‘Credit Score’ in the same context. CIBIL is a credit bureau that provides credit scores similar to Experian, Equifax, and CRIF High Mark. These bureaus are authorised by the RBI. All these bureaus are equally qualified to provide credit reports. Each bureau considers its own factors to generate credit scores and credit reports, which may cause variations in the credit reports of the borrowers.
Myth #3 A Low Credit Score Lasts Forever
Your CIBIL score is not permanent and can be improved over time by making timely payments, reducing debt, and managing credit responsibly. There are many ways you can improve your credit score and try and build a good credit history which will, in turn, build a good credit score in time.
Myth #4 A Low CIBIL Score Means No Loan
While a low CIBIL score can make loan approval complex, it is not impossible. A low credit score can affect the result of your loan application but it does not imply outright rejection. There are several other factors that can influence your loan application such as your income, age, and employment type.
Myth #5 Credit Score Depends on Your Annual Income
A credit score does not depend on your annual income but is influenced by factors such as the credit lines you have and your efficiency at handling them. You could be earning a substantial amount in a month, but if your credit behaviour isn’t good enough, your credit score will decrease.
Myth #6 Anyone Can Check My CIBIL Score
You might suspect that your credit history is accessible to anyone with a basic understanding of Google search. Although you are not the only person who has access to your credit scores and reports, you can rest assured that this financial information is only shared with those who have a legitimate need for it. Not everyone can check or is authorised to check your credit score. It is either you or registered financiers have the right to check your CIBIL, that too after obtaining your consent as the borrower.
Myth #7 Debit Card Builds a Credit Score
Debit cards do not contribute to your credit score. Since a debit card is a way to access your savings account and it does not cover credit, any transactions done with a debit card will not be factored in to build your credit history or credit score. Because there is no borrowing involved in the process, debit card use has no direct impact on the credit score. In order to build a CIBIL score, you have to get yourself a credit card or a loan.
Myth #8 Closing Old Accounts Can Boost Your Credit Score
Closing an old credit card account will lead to a shortening of your credit history. When you have a long credit history, lenders will get a better idea of your credit activities. Closing an account may save you on annual fees or reduce the risk of fraud on those accounts, but this may lead to a decrease in your credit score. Before closing accounts to improve your credit score, check your credit reports online to see the status of your accounts. Keep in mind that accounts that have been open for a long time, as well as those with high credit limits but low balances, may have a positive impact on your credit score.
Myth #9 Clearing Off Debt Will Remove the Transaction from Your Credit Report
Paying off debt will NOT completely remove the transactions from your credit history. It will remain on your credit report for years to come.
Myth #10 Having Zero Credit is Good
Not really. When you apply for credit card or loan applications, lenders judge you on the basis of your credit history. Therefore, having no credit history at all is not ideal or good. If your credit history is less than six months old, your credit score will be zero (0) because the credit reporting bureau does not have enough information to assess your credit history and assign you a credit score. It takes time to build a credit history, so if you have just availed of your first loan, credit card, or other form of credit, you may see zero as a credit score on your report.
Also Read: Zero or Negative Credit Score: What Does it Mean?
Conclusion:
Credit scores are easy to understand computations.
It is best to understand the way credit scores work to avoid inaccurate financial planning before availing of a Home Loan.
DISCLAIMER:
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent errors or delays in updating the information. The material contained in this website and on associated web pages, is for reference and general information purposes, and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. Neither Bajaj Housing Finance Limited nor any of its agents/associates/affiliates shall be liable for any act or omission of the Users relying on the information contained on this website and on associated web pages. In case any inconsistencies are observed, please click on contact information.
Trending Articles
loan+against+property Loan Against Property
[N][T][T][N][T]
A Guide to Loan Against Property for Doctors2022-06-27 | 5 Min
home+loan Home Loan
[N][T][T][N][T]
Understanding Loan-to-Value Ratio (LTV) and its Calculation2023-11-28 | 4 Min
loan+against+property Loan Against Property
[N][T][T][N][T]
3 Different Loan Against Property Types You Should Know About2024-02-13 | 5 Min
loan+against+property Loan Against Property
[N][T][T][N][T]
Loan Against Property for Doctors: Interest Rates and Charges2023-11-24 | 6 Min
loan+against+property Loan Against Property
[N][T][T][N][T]
Why Loan Against Property Can be a Good Credit Option for a Startup Business?2023-12-22 | 5 Min
[N][T][T][N][T]
A Complete Guide to Check Credit Score Easily for Free2024-05-02 | 3 min
home+loan Home Loan
[N][T][T][N][T]
Difference Between Home Loan and Personal Loan: Which is better?2024-03-04 | 4 min
[N][T][T][N][T]
6 Smart Tips to Increase Your Home Loan Eligibility2024-06-27 | 4 min
[N][T][T][N][T]
5 Essential Things You Need for a Home Loan Approval2024-05-08 | 3 min
[N][T][T][N][T]
7 Benefits of Taking a Home Loan in India2024-06-19 | 3 min
cibil Cibil
[N][T][T][N][T]
What's Considered a Healthy Credit Mix?2024-06-11 | 3 min
home+loan Home Loan
[N][T][T][N][T]
All About Home Loan Balance Transfers2024-06-04 | 4 mins
cibil Cibil
[N][T][T][N][T]
What Distinguishes CIBIL Score from CIBIL Report?2024-04-11 | 3 min
home+loan Home Loan
[N][T][T][N][T]
What Is Home Loan Eligibility and How Is It Calculated2024-07-11 | 6 min
cibil Cibil
[N][T][T][N][T]
How Does Being A Loan Guarantor Affect Your Credit Score?2023-03-23 | 4 min
cibil Cibil
[N][T][T][N][T]
What is Credit Mix and How to Boost Your Credit Score?2023-03-27 | 7 min
cibil Cibil
[N][T][T][N][T]
Will a Loan Settlement Ruin My CIBIL Score?2023-03-21 | 4 min
cibil Cibil
[N][T][T][N][T]
How can I Remove Loan Inquiry from CIBIL Credit Report2024-01-22 | 5 min
cibil Cibil
[N][T][T][N][T]
Does CIBIL Score Affect Loan Against Property Eligibility?2023-02-15 | 7 min
cibil Cibil
[N][T][T][N][T]
How To Improve CIBIL Score After A Payment Default?2023-03-29 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Everything You Need to Know About Top-up Loans on a Home Loan2024-04-09 | 6 min
cibil Cibil
[N][T][T][N][T]
What Is a Good Credit Score for a Home Loan?2022-12-28 | 5 min
cibil Cibil
[N][T][T][N][T]
Things That Can Go Wrong with Your CIBIL Report2023-03-15 | 5 min
cibil Cibil
[N][T][T][N][T]
How a Good CIBIL Score Can Help You Celebrate the Festive Season Better2024-03-19 | 5 min
home+loan Home Loan
[N][T][T][N][T]
How to Get a Better Interest Rate on Your Home Loan2024-01-04 | 5 min
cibil Cibil
[N][T][T][N][T]
How Can Your CIBIL Score Help in Negotiating Better Home Loan Deals2023-05-18 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Get a Home Loan Without Visiting Branch: A Step-by-Step Guide2024-03-20 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Complete Guide to Securing a Attractive Interest on Home Loans2024-01-23 | 3 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding the Fees and Charges on Your Loan Against Property2024-02-16 | 8 min
cibil Cibil
[N][T][T][N][T]
Here’s What You Can Do to Improve Your CIBIL Score2023-03-16 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Home Loan Refinancing: What, Why, and Things to Remember2024-06-17 | 5 Min
tax Tax
[N][T][T][N][T]
How to Avail of Tax Benefits on a Loan Against Property2024-06-13 | 5 Min
cibil Cibil
[N][T][T][N][T]
Top 10 Reasons For Low CIBIL Score & How To Improve It2024-03-01 | 5 min
home+loan Home Loan
[N][T][T][N][T]
5 Great Ways Women Can Benefit from Taking a Housing Loan2024-01-16 | 5 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Top Benefits of a Loan Against Property Over Collateral-Free Loans2024-01-09 | 4 min
cibil Cibil
[N][T][T][N][T]
Five Reasons Why a Bad Credit Score Could Lead to Loan Rejection2024-01-22 | 5 min
cibil Cibil
[N][T][T][N][T]
How Does Your Digital Footprint Affect Your CIBIL Score?2024-03-20 | 5 min
cibil Cibil
[N][T][T][N][T]
How Can I Get My ECN Number in CIBIL?2024-01-09 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Types of Home Loan Charges2024-01-22 | 3 Min
home+loan Home Loan
[N][T][T][N][T]
What is Foreclosing a Home Loan? These are Some of the Do’s and Don’ts2023-12-20 | 6 min
tax Tax
[N][T][T][N][T]
10 Useful Income Tax Deductions for FY 2022-232024-02-21 | 6 min
home+loan Home Loan
[N][T][T][N][T]
All You Need to Know About Home Loans2023-01-19 | 5 min
cibil Cibil
[N][T][T][N][T]
Ways You Can Improve your Credit Score for a Small Business2023-03-01 | 5 min
tax Tax
[N][T][T][N][T]
5 Tax Savings and Other Advantages You Can Get When You Apply for Home Loans2024-02-14 | 6 min
cibil Cibil
[N][T][T][N][T]
Reasons Why Your CIBIL Score Is Going Down2024-04-10 | 4 min
[N][T][T][N][T]
Checklist of Documents Required for Home Loan2024-02-07 | 5 min
home+loan Home Loan
[N][T][T][N][T]
How to Get a Housing Loan Approved Instantly?2024-04-10 | 5 min
home+loan Home Loan
[N][T][T][N][T]
What Is a Pre-Approved Home Loan and How Should You Get It Done?2024-03-12 | 5 min
tax Tax
[N][T][T][N][T]
Should You Get a Home Loan to Save Your Taxes?2024-02-01 | 3 min
home+loan Home Loan
[N][T][T][N][T]
How to Pay Off Your Home Loan Quicker2024-03-11 | 4 Min
cibil Cibil
[N][T][T][N][T]
How Business Loans Affect Your CIBIL Score & How to Improve the Same2024-03-13 | 6 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Short vs. Long Loan Against Property Tenor - Which Is Better?2024-05-07 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Consider These Factors Before Foreclosing Your Home Loan2024-04-16 | 3 min
tax Tax
[N][T][T][N][T]
What is a Property Tax in India and How is It Calculated?2024-03-13 | 4 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Understanding the Fees and Charges on Your Loan Against Property2024-04-10 | 6 min
cibil Cibil
[N][T][T][N][T]
How Does Missing One Payment Affect Your CIBIL Score?2024-05-15 | 4 min
home+loan Home Loan
[N][T][T][N][T]
6 Ways to Reduce Your Home Loan Interest2024-03-20 | 4 min
cibil Cibil
[N][T][T][N][T]
Ways to Improve Your Credit Score with a Credit Card2024-02-02 | 4 min
cibil Cibil
[N][T][T][N][T]
What Factors Do Not Affect Credit Scores?2024-02-28 | 7 min
cibil Cibil
[N][T][T][N][T]
How to Check Your CIBIL Score for Free and What to Do If There Are Errors in It2024-06-05 | 4 min
home+loan Home Loan
[N][T][T][N][T]
What Affects the Interest Rate on Your Home Loan2024-03-13 | 5 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Easy Ways to Pick the Right Loan Against Property Tenor2024-05-14 | 3 min
cibil Cibil
[N][T][T][N][T]
How to Check, Calculate, and Improve CIBIL Score?2024-01-11 | 2 min
tax Tax
[N][T][T][N][T]
How to Save Tax for Salary Above 30 Lakh?2023-08-07 | 6 min
tax Tax
[N][T][T][N][T]
How to Save Tax Between Rs 20 to Rs 25L Salary in India2023-07-19 | 6 min
home+loan Home Loan
[N][T][T][N][T]
10 Smart Steps for Effective Home Loan Management2024-02-16 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Advantages for First-Time Home Buyers2023-07-14 | 4 min
home+loan Home Loan
[N][T][T][N][T]
How to Determine Your Ideal Credit Score for a Home Loan?2024-03-28 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Would it be Possible for Me to Apply for a Second Mortgage?2024-05-22 | 3 min
cibil Cibil
[N][T][T][N][T]
Easy Ways to Maintain a Good Business Credit Score2024-01-10 | 5 min
cibil Cibil
[N][T][T][N][T]
Impact of Late Payment on CIBIL Score?2024-03-08 | 6 min
home+loan Home Loan
[N][T][T][N][T]
Common Myths About Home Loans: All You Need to Know2024-04-08 | 5 min
[N][T][T][N][T]
5 Benefits of Availing of a Home Loan at an Early Age2024-05-10 | 3 min
[N][T][T][N][T]
7 Smart Ways to Boost Your CIBIL Score for a Home Loan2024-05-09 | 6 min
cibil Cibil
[N][T][T][N][T]
Pay Minimum Amount Due on Your Credit Cards Will Impact Your Credit Score2024-03-11 | 5 min
cibil Cibil
[N][T][T][N][T]
Here’s How a Short-term Loan Can Help You Improve Your CIBIL Score2024-03-25 | 5 min
cibil Cibil
[N][T][T][N][T]
How Can I Raise My Credit Score From 360 to 800 Within a Year?2024-03-21 | 5 min
home+loan Home Loan
[N][T][T][N][T]
What is an NOC Letter and Why is it Important?2024-05-14 | 3 min
tax Tax
[N][T][T][N][T]
Income Tax Structure in New Regime: New Tax Exemption Limit 20232024-05-08 | 4 min
loan+against+property Loan Against Property
[N][T][T][N][T]
Top 5 Issues Regarding Loan Against Property Application Rejection that You Might Face2023-02-14 | 5 min
tax Tax
[N][T][T][N][T]
Know all About Top Up Loans and How to Avail of Tax Benefits2023-12-12 | 5 min
home+loan Home Loan
[N][T][T][N][T]
5 Tips for Lowering Home Loan Interest Rates in 20232024-03-19 | 5 min
home+loan Home Loan
[N][T][T][N][T]
How Can Your Credit Score Impact Your Home Loan Interest Rate?2024-02-13 | 6 min
[N][T][T][N][T]
Everything You Need to Know About Home Loan Tax Benefits2024-04-23 | 6 min
cibil Cibil
[N][T][T][N][T]
Does a Name Change Affect Your Credit Score2024-01-07 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Home Loan Balance Transfer: Benefits, Eligibility, and More2024-05-15 | 3 Min
home+loan Home Loan
[N][T][T][N][T]
Benefits of Submitting a Digital Home Loan Application in Current Times2023-12-20 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Common Mistakes to Avoid When Applying for a Home Loan2023-12-04 | 2 min
home+loan Home Loan
[N][T][T][N][T]
Differences Between Fixed and Floating Interest Rates2024-05-15 | 2 min
cibil Cibil
[N][T][T][N][T]
Everything You Should Know About Your CIBIL Score2024-02-09 | 7 min
tax Tax
[N][T][T][N][T]
Top Benefits of Using an Online Income Tax Calculator2023-12-28 | 5 min
cibil Cibil
[N][T][T][N][T]
What is Credit Score and Its Impact on Loan Availability2023-03-27 |
cibil Cibil
[N][T][T][N][T]
What Does Your Credit Score Tell About You?2024-06-11 | 5 min
cibil Cibil
[N][T][T][N][T]
Know How Mortgage Loan Affect Your CIBIL Score2024-02-05 | 5 Min
home+loan Home Loan
[N][T][T][N][T]
ITR Filing for Home Loan – Know the Right Process to File Your Income Tax Returns2024-02-16 | 5 min
cibil Cibil
[N][T][T][N][T]
Why is a CIBIL Score Measured Between 300 and 900?2024-05-07 | 4 min
cibil Cibil
[N][T][T][N][T]
What are the Types CIBIL Errors & How to Correct Them?2023-11-22 | 6 min
cibil Cibil
[N][T][T][N][T]
What is CIBIL? Understand How It Works and Its Importance2024-01-31 | 6 min
tax Tax
[N][T][T][N][T]
What Does It Mean to Have a CIBIL Score of -12023-06-16 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Home Loan Terminologies2024-06-01 | 3 min
cibil Cibil
[N][T][T][N][T]
What Are Tradelines and How to Find Them On Your Credit Report?2024-05-28 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Ways to Check Bajaj Housing Loan Account Numbers2024-04-05 | 3 min
home+loan Home Loan
[N][T][T][N][T]
What Do You Need to Know About Home Loan Foreclosure?2023-03-23 | 5 min
cibil Cibil
[N][T][T][N][T]
Introduction to Credit Information Bureau India Limited (CIBIL)2024-04-15 | 6 min
home+loan Home Loan
[N][T][T][N][T]
Section 80EE: Claim Deductions on the Home Loan Interest Paid2023-02-17 | 6 min
home+loan Home Loan
[N][T][T][N][T]
What is the Process to Get Your Home Loan Approved Fast with Bajaj Housing Finance?2024-02-15 | 6 min
home+loan Home Loan
[N][T][T][N][T]
What are the Different Types of Loans Available in India?2024-01-02 | 5 Min
cibil Cibil
[N][T][T][N][T]
What Does a Zero or Negative Credit Score Mean?2023-02-24 | 4 min
cibil Cibil
[N][T][T][N][T]
How Many Credit Inquiries are Too Much in a Year2023-09-21 | 2 min
cibil Cibil
[N][T][T][N][T]
How to Check CIBIL Score Online?2023-03-14 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Top 5 Home Loan Benefits for First-time Woman Buyers2024-05-14 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Importance of an NOC Letter after Closing Your Home Loan2023-12-14 | 6 min
home+loan Home Loan
[N][T][T][N][T]
Benefits of a Joint Home Loan with your Spouse2023-08-04 | 4 min
home+loan Home Loan
[N][T][T][N][T]
How to Pick the Best Home Loan Tenor that Suits Your Budget2023-06-29 | 5 min
home+loan Home Loan
[N][T][T][N][T]
How Digital Platforms Are Revolutionising the Face of Housing Finance2023-12-21 | 7 min
home+loan Home Loan
[N][T][T][N][T]
What is the Ideal Down Payment for a Home Loan?2024-05-16 | 5 min
tax Tax
[N][T][T][N][T]
Comparison Between New Tax Regime vs Old Tax Regime2024-04-10 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Know All About the Home Loan Foreclosure Procedure2023-12-20 | 5 min
cibil Cibil
[N][T][T][N][T]
10 Common Myths About CIBIL Score2024-03-27 | 4 min
cibil Cibil
[N][T][T][N][T]
Check CIBIL Score with PAN Card for Free, in 3 Steps2024-02-27 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Advantages of Including a Co-Applicant on Your Home Loan2024-01-21 | 7 min
home+loan Home Loan
[N][T][T][N][T]
What is the Difference Between Top-up Loan and Home Improvement Loan2023-01-11 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Are Registration Charges Compulsory When You Opt for a Home Loan?2024-04-15 | 5 min
home+loan Home Loan
[N][T][T][N][T]
Can I Take a Home Loan and a Personal Loan Together?2024-01-17 | 4 min
home+loan Home Loan
[N][T][T][N][T]
Should You Take a Home Loan Even If You Have Enough Money to Buy a House?