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Knowledge about CIBIL score is essential not only for people with credit histories but also for the ones that have not applied for a credit card or a loan yet. A CIBIL score is a 3-digit credit number that is generated by TransUnion CIBIL (credit bureau) on the basis of past credit information of an individual. It ranges between 300 and 900. The closer your CIBIL score is to ‘900’, the easier it will be for you to get credit from lenders.
1. Low CIBIL does not always means no loan.
“Low CIBIL score means no loan” is not applicable in all cases. Different banks have different credit score cut-offs as per different types of loans. Therefore, low CIBIL score may get you some rejections from lenders but it does not mean that you will not be given loan at all. Even with a low CIBIL score, there is a probability that you will get a loan but at a high rate of interest. If not from banks, you can probably get it from NBFCs.
2. Even though you have never requested your CIBIL score, it still exists.
Many people have this misconception that since they have never requested for their CIBIL Credit Information Report (CIR), therefore, it does not exists. However, that is not the case. Each month, lenders such as banks report credit information of all borrowers to credit bureaus. Therefore, if your credit history exists, so does your credit score.
3. Your CIBIL score may not match with credit scores generated by other credit bureaus.
Credit scores generated by TransUnion CIBIL and other credit bureaus (Experian, Equifax and CRIF High Mark) may or may not be the same even with identical credit information. This is because each credit bureau uses their own scoring model to calculate credit scores. Another reason why your CIBIL score differs from the credit scores generated by other credit bureaus is that the updated credit information from different lenders were reported to bureaus on different days.
4. CIBIL does not edit or delete information from your credit report directly.
CIBIL generates credit report on the basis of the credit information that they receive from various credit sources such as banks and NBFCs. They do not have the authority to delete or edit your credit information directly. They can update your credit report but only when the changes are authorised and provided by the concerned credit source.
5. You can check your CIBIL score innumerable times without hurting your score.
If a person enquires about his/her CIBIL score directly from credit bureaus or through authorised third party entities, it is called soft enquiry. Soft enquires no matter how many times they are made, does not impact your CIBIL score. Your CIBIL score gets hurt when banks, credit card companies and other creditors enquire about your credit report from credit bureaus (hard enquiry). Therefore, avoid hard enquiries as much as you can.
6. Having no credit history does not mean you will have an excellent CIBIL score.
It is a common misconception that a person with no credit history will have an excellent CIBIL score. However, in reality, a person who has never had a credit card or taken any loans be it a home loan or a personal loan can never get their credit report or credit score from CIBIL. This holds true for other credit bureau too because the bureaus did not get your credit data from lenders to generate credit report and calculate credit score.
7. CIBIL does not maintain a defaulter’s list.
There is a common misconception that CIBIL and other credit bureaus maintain a defaulter’s list. However, in reality, CIBIL or any other credit bureaus do not maintain a defaulter’s list. CIBIL and other credit bureaus are only responsible for collecting and maintaining individuals’ credit information as given by member credit institutions such as banks and NBFCs. The decision to grant a loan solely depends on lenders.
8. Closing your old credit accounts will not increase your credit score.
Many people believe that closing their old credit accounts will help them improve their CIBIL score. However, the truth is that closing your old credit accounts negatively impacts your score. People who have long and stable credit histories prove that they have managed their credit responsibly in the past. Therefore lenders prefer lending money to people with old credit accounts to new credit accounts. The older your account will be, the better will be your credit score, provided you handle your credit well.
9. Applying for multiple lines of credit frequently lowers your CIBIL score even if you repay loan amount on time.
When you apply for a loan or a credit card, lenders make hard enquiries i.e., request for your credit report from credit bureaus to check your creditworthiness. Unlike soft enquiries, hard enquiries are not good for your credit score. Therefore, applying for multiple lines of credit increases hard enquiries in your name, and subsequently causes your CIBIL score to drop by a few points even though you repay your loan amount on time.
10. You’re entitled to free credit report from CIBIL.
As per RBI’s directives, all credit bureaus in India including TransUnion CIBIL will have to provide a full free credit report once in a year to all individuals whose credit information they hold. Therefore, you’re entitled to free credit report from CIBIL once a year. However, if you need it more than once, then you will have to pay a small amount for it.