Demystifying CIBIL: Debunking Common Myths and Misconceptions

 

Here are some common misconceptions that people may have:

 

Checking your own credit report hurts your credit score: This is a myth. When you check your own credit report or score, it's considered a "soft inquiry" and doesn't impact your credit score negatively. However, when lenders or creditors check your credit report as part of a credit application process (known as a "hard inquiry"), it can have a small, temporary impact on your score.

 

Purchasing your credit score will improve it: Purchasing your credit score won't directly improve it. Your credit score is based on various factors such as your payment history, credit utilization, length of credit history, types of credit accounts, and new credit inquiries. Simply buying your credit score won't change these factors.

 

Closing credit accounts will improve your credit score: Closing credit accounts can actually have a negative impact on your credit score, particularly if you close older accounts or accounts with a good payment history. Closing accounts can affect your credit utilization ratio and the average age of your credit accounts, both of which are factors in determining your credit score.

 

Credit reports always have errors: While errors can occur on credit reports, they are not necessarily common for every individual. It's still important to regularly check your credit report for inaccuracies and dispute any errors you find.

 

A low credit score means you can't get credit: While having a low credit score can make it more difficult to qualify for credit or loans, it doesn't necessarily mean you can't get credit at all. There are lenders who specialize in offering products to individuals with lower credit scores, although they may come with higher interest rates or stricter terms.

 

It's important for individuals to understand how the credit reporting system works and to be aware of their own credit history and score. Regularly checking your credit report, understanding the factors that affect your score, and taking steps to improve your creditworthiness can all help you maintain healthy credit.

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