CIBIL: 6 common misconceptions about credit scores you should be aware of

livemint.com:

Before handing out a loan, banks invariably check the applicant’s credit score.

So, it goes without saying that a good credit score is indispensable for anyone to procure a loan. However, there are a slew of misconceptions about CIBIL score.

Checking your score hurts it: This is a widespread misconception. Checking your CIBIL score, also known as a soft inquiry,  does not  affect your score. In fact, it's recommended to monitor your score regularly to identify any errors or suspicious activity.

Closing old accounts leads to improvement: Not necessarily. Closing old accounts can actually shorten your credit history, which is a significant factor in determining your score. It's generally better to maintain good standing on older accounts, even if they are inactive.

CIBIL is the only credit bureau: CIBIL is a major credit bureau in India, but it's not the only one. Other bureaus like Experian and Equifax also provide credit scores and reports.

Bad score lasts forever: Not true. With consistent improvement in your credit habits, like paying bills on time and maintaining low credit utilisation, your score can improve over time.

Credit score depends on income: Your income is not a direct factor in your credit score. However, your credit utilisation ratio (outstanding credit compared to credit limit) can be. So, someone with a high income who spends heavily on credit might have a lower score than someone with a lower income who manages credit responsibly.

Married couples have a combined score:  Each person in a marriage has their own credit score. While a joint loan application might consider both scores,  they aren't merged into one.

These are just a few of the common myths about CIBIL scores. By understanding how your credit