The CIBIL stands for Credit Information Bureau (India) Limited (CIBIL). It is the first Credit Information Company (CIR) in India founded in 2000. Among the four Reserve Bank of India (RBI) licensed companies, this is the most popular one. However, three more companies have the license of RBI to function as credit information companies. These companies are Experian, Equifax, and Highmark.
These companies are included in the process of checking the credit score of the user and then sending it to the banks, lenders, and NBFCs. However, having a good credit score is important nowadays to get a loan, and because of that many rumors spread in the market about increasing your score. In the article, 6 misconceptions about CIBIL scores are mentioned that do not have any relation to increasing or decreasing your credit score at any range.
CIBIL collects and maintains records of an individual’s loan and the payment of credit cards every month. Then this data is used to create the Credit Information Reports (CIR) and shared with the institutions to evaluate and approve the loan applications. The credit score is a 3-digit numeric summary of your credit history, rating, and report range from 300 to 900. The higher the score is, the better your credit score.
The following are the myths about the credit score that people usually think:
The credit score is affected by loans you have taken, and not the savings and investments you have made. As your CIR only reflects your loan and credit card balance. The policies you have purchased, the amount present in your bank account, and fixed deposits are not used for calculating your CIBIL score. So, the multiple policies do not affect your score.
Mostly people think that a bounced or stop payment cheque will have a negative impact on their CIBIL score. But there is nothing like that, as the bounced cheque is not taken into consideration for calculating the CIBIL score. This does not affect the score until it is related to the installment or repayment of the loan.
The change in income can affect your spending habits but not your credit score. As you will only spend as per your earnings. For example, if you were earning a six-figure salary, then you spend according to it. In case of a sudden decrease in income will affect your spending habits, but it will not have any impact on your credit score.
The CIBIL score is connected with your credit card and not the debit card. Any payment made by the debit card will not affect your credit score. If you use only a debit card and do not have a credit card or have taken any loan, then you will not have a credit score. The activities of debit cards are completely different from credit cards.
If you think that checking your CIBIL score regularly will decrease it then it's a myth, as it does not affect it in any way. You should CIBIL score once every three months, but checking it once every two months is also fine. The banks usually update their customers' CIBIL scores at the end of the financial year. Checking your CIBIL score will not decrease it or even increase it.
The credit report includes your personal information, such as your name and age. This information is independent of your current demographic situation. So, if you change your address, marital status, education level, religion, or any other factor, it does not affect your CIBIL score. CIBIL only collects limited information such as your name, contact details, residential address, and date of birth, and even if there are changes in these factors, it will not impact your CIBIL score.
Doing the following things will help you increase your credit score to avail the multiple benefits associated with it.
The following are the steps for checking the CIBIL score by following the simple steps. Multiple companies offer the tool for checking credit scores. Some of the examples are the SBI Cibil Score tool and the Bajaj Finserv CIBIL score tool. However, you can choose InvestKraft, as it requires only a few steps:
Step 1: Visit the website of InvestKraft, and check the tool of Credit Score.
Step 2: Register your basic contact details for OTP verification.
Step 3: Fill the received OTP for further procedure.
Step 3: Share the relevant information as required.
Step 4: Check your latest Credit Report on display.
Step 5: Download the Credit Report, if required.
Similarly, you can check your CIBIL score by PAN card. To check the score, you must have a valid and original PAN card to access your free CIBIL score and report. As your PAN card is linked to all your financial and banking accounts, it helps the Credit Information Companies (CICs) and credit bureaus to easily locate your information.
People have multiple misconceptions about credit scores. But we can say that having a good credit score has multiple benefits, and the credit card holder must focus on things that can help their CIBIL score to increase. They should not fall for misconceptions. A higher credit score will help you get a loan or credit card at a favorable interest rate. And, a high credit score can provide you with benefits such as lower interest rates, better repayment terms, and quicker loan approval.