Credit Information Bureau of India, commonly known as CIBIL is one of the trusted credit information companies in India. The bureau is responsible for collecting financial reports from financial institutions and banks relating to loan and credit card payments of all its customers. Based on an individual’s repayment record, CIBIL prepares a report that helps loan providers assess an individual’s credit worthiness. CIBIL Score is a three-digit numeric score calculated by the bureau, reflecting an individual’s credit history. Credit card companies, loan providers and other financial institutions heavily rely on this score to assess an individual’s credit eligibility. Loans and credit cards are offered based on an individual’s credit score. The score ranges from 300-900 with 300 being the lowest and 900 the highest. Higher the score, higher the chances of an individual getting a high loan amount at a low interest rate. However, there are many myths associated with CIBIL that need to be busted. Read this article to know all about the myths associated with CIBIL Score.
CIBIL is responsible for loan approval and rejection: In reality, CIBIL is not responsible for approval or rejection of the loan. The bureau maintains the record of an individual’s credit history based on which the score is calculated. The prerogative of loan approval and rejection lies in the hands of the lender or credit card company and not on the bureau.
CIBIL can make changes in the credit report: CIBIL cannot make changes in the credit report of an individual as the records are submitted to the bureau by banks and financial institutions. The records can be updated but no changes can be done by the bureau as per their wish and will.
A bad credit score lasts forever: Though a credit score is a representation of your financial well being, but that does not mean that it will stay the same forever. Even if you have a low score that does not mean that it will stay the same always. You can look to improve your score by paying your credit card bills on time, avoiding EMI bounces, maintaining a mixed bag of credit and following other tips. Following good practices to improve the credit score will help you increase the score, which will make it easy for you to secure a loan in future.
Getting married will help you increase your credit score: Irrespective of your marital status, your credit score does not have any impact as it is a representation of your own financial well being and is generated based on your credit behavior. Holding joint accounts does not have any impact on your score.
Being a co-borrower does not have any impact on your credit score: When signing up as a co-borrower, you are liable to pay off the debt if the primary applicant defaults on the loan or credit card payment. In the event of default done by the primary applicant, the credit score of the borrower also has an impact.
CIBIL score is the only determining factor for your loan approval: When assessing your loan application, CIBIL Score is not the only factor that the lenders check on. Even if you have a high score, chances of your loan application being rejected is high as lenders also check on other criteria such as income, age, residence type, employment status and others. For instance, even if you have a high credit score of more than 800 but have a high debt to income ratio, then the lender is likely to reject your loan application.
It is important to note that your CIBIL Score is one of the significant factors that the lenders check on when assessing your loan application. Therefore, it is necessary for you to be aware of the above facts when applying for the loan to get better clarity on your application and secure a loan at a low interest rate.