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Many people know about CIBIL Score or Credit Score. Due to a good CIBIL score, it is easy to get a loan and a good interest rate is also offered. In such a situation, people try every trick to increase their credit score.

Many people know about CIBIL Score or Credit Score. Due to a good CIBIL score, it is easy to get a loan and a good interest rate is also offered. In such a situation, people try every trick to increase their credit score. However, there are many myths related to this, due to which some people also get into trouble.

If you ever go to take a loan, then first of all your CIBIL score is checked there. Credit score is like your report card, which tells how your repayment history has been in the previous loan. Although this score ranges between 300 to 900, but a CIBIL score of 750 or above is considered good. You can improve it by doing transactions in a better way. Let's know about 5 myths related to credit score.

First myth

The most common myth is that high income means good credit score. Whereas the truth is that banks and credit bureaus also look at many other things, such as how many types of loans you have taken (credit mix), payment history, how much of the credit limit is being used (credit utilization) and overall financial profile.

Second myth

Another common misconception is that checking your own credit score reduces the score. Whereas the truth is that checking by yourself is called 'soft inquiry' and it has no effect on the credit score. Repeated score checking by the bank or loan giving institutions is called 'hard inquiry', which has a slight effect on the score.

Third Myth

Many people believe that if they close their old credit card, it will increase their score. This is not true at all. On the contrary, it will reduce your credit score. Due to closing the credit card, your total credit limit will be reduced, due to which your credit utilization ratio will increase, which will have an adverse effect on your credit score.

Fourth Myth

Many people think that if they repay their ongoing loan before time, it will improve their credit score. Keep in mind that to improve your credit score, you have to pay EMIs on time and show that you can manage your credit well and pay EMIs on time. This will improve your credit score.

Fifth Myth

People think that CIBIL score and credit score are the same thing. This is not so. Actually, CIBIL is an organization that tells the credit score. There are many such organizations that tell people's credit score.

Why is it important to have the right information?

In today's era, digital lenders have automated systems that directly reject loans on low scores. In such a situation, it is important to dispel these myths or else you may have to face loan delays, rejection or higher interest rates.