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 Myths about cibil score demystified

Myths about cibil score demystified

In the era of the Internet, we are flooded with way more information than what we can handle. Which is why at the end of the day, although we may seem to know about a lot of things, we actually don’t. This is precisely why, it is important for us to distinguish the facts from the myths so that we can avoid major mistakes when it comes to money matters and more specifically when it comes to maintaining our credit score.

Myth #1: Get debt counselling

Reality: Seek debt counselling only if you really need it.

When you are at cross roads wherein you need to get a hold of your financial life, it is not an impossible task to get it back on track. Although, some of us may require some external help, it is not always the case.

Unless you find it almost impossible to manage all your debts on your own, debt counselling needn’t be inevitable.


Myth #2:Cibil makes a not only of all the defaulters

Reality: Cibil is a neutral platform which stores information on every loan or credit card you have taken

If your information is found in cibil, it doesn’t mean you are a defaulter. Even if you are  paying your dues on time – the same will be reflected in your cibil report. Your cibil report merely reflects some of your personal loan information,  / credit card transactions and also the number of times you have applied for a loan or a card (in the form of enquiries in your cibil report).

This report is carefully reviewed by the banks at the time when you apply with them for a loan or a credit card. Additionally, you can also view your report by purchasing it online.


Myth #3: Ignore debt, if you can’t pay it

Reality: Never Ignore debt; pay it all off.

Leaving your dues unpaid, or running away from your money problems is only going to make it worse let alone help you in anyway. Because, even a written off debt will be recorded in your cibil report, the same goes for your late payments. Although, one or two late payments are forgivable, continuously missing your monthly payments will get you the label of a defaulter. This means getting a loan in the future is not going to be easy at all.


Myth #4: Use your retirement funds, if you don’t have any other choice

Reality: Never use your retirement funds, till you retire.

If anyone ever advises you to dig into your retirement savings just to close your debt, don’t go ahead with this idea. You never know what you are going to be faced with till the point of time you actually stare an issue in the face. Especially after you have retired, you aren’t going to be earning much – this is when you will need your retirement funds the most.

Now, if you are going to use it all up even before you retire, how will you manage later on?

There are always solutions out there when you are in a problem, never resort to a temporary one. Because, it takes a lifetime of earnings to build your retirement funds and no more than a few hours to spend it.


Myth #5: If you check your cibil report often, your score will be lowered

Reality: Your score will not be lowered when you check your score.

Every time you apply for a loan or a card, the lending institution will take your cibil report for careful review of your past credit records. This will be recorded as an “enquiry” of credit in your report. Whereas, when you are purchasing your report, it will not impact your cibil score in any way.

In fact, it is a good practice to check your report once or twice a year so that you can keep a check on it.


Myth #6: All my financial transactions will have an impact on my cibil score.

Reality: Only your credit cards & loan transactions impact your score

Your savings/ current account transactions are not going to impact your score any which way. However, if you have had any check bounces pertaining to your emis then it will be reflected in your report, consequently your score will be affected.

It is advisable to know the facts and not get confused with unnecessary information overload.

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Priya Rai is a loan consultant.