CREDIT Score Myths Debunked

Viral V Bhatt
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isVerifiedExpertAuthor is a Zfunds Verified Expert
Viral V Bhatt

CREDIT Score Myths You Shouldn’t Believe

CREDIT Score is a three-digit numeric summary of your credit behavior; it is generated by TransUnion CIBIL based on your financial transactions i.e. EMI payments, credit card usage, loan accounts, and credit inquires. The score ranges from 300 to 900 with 300 being the highest and 900 the highest. However, several misconceptions are surrounding the CREDIT Score, which needs to be debunked, as lack of awareness will help you make uninformed financial decisions. Read this article to know about all the credit score myths you shouldn’t believe in.

Myth 1: Your monthly income impacts your CREDIT Score

Fact: Your monthly income impacts the loan amount and interest you are eligible to get and not your CREDIT Score. The number of credit accounts you hold and the balance you own in the same influences the score. 

Myth 2: CIBIL rejected my loan application

Fact: Your loan application is not rejected by the CIBIL Bureau and is rejected due to a low CREDIT score. Credit bureaus are not involved in the business of making lending decisions, as lending institutions are entitled to do the same. The bureau is responsible for generating a credit report based on the information provided by the banks and other financial institutions. Hence, the loan is not rejected by the CIBIL bureau but due to a low CREDIT score.

Myth 3: CIBIL is the only bureau in India

Many people are unknown of the fact that there are over three other bureaus in India excluding CIBIL who are licensed and operated by Reserve Bank of India. These bureaus are: Equifax, CRIF High Mark, and Experian. However, CIBIL is the oldest of the four credit bureaus in the country.

Myth 4: Loan rejection does not have any impact on CREDIT Score

Fact: At the time of your loan application, lenders check on your CREDIT score as it gives them a fair idea of your creditworthiness; it helps them gauge your repayment capacity, the previous loan inquires, and your existing loan holdings. Even if your loan application is rejected the CREDIT score will decrease which will further reflect too many credit inquires and make you ineligible to fetch a loan from other lenders as well.

Myth 5: Your CREDIT Score is the only factor that decides the fate of your loan application

Fact: Your CREDIT score is not the only factor that lenders check on when assessing your loan application. Income, job profile, income to debt ratio, job stability, residence status, and other factors not only have an impact on your application but also influence the loan amount and the interest rate you are eligible to get.

Myth 6: If you are married your CREDIT score increases

Your credit score is a reflection of your own credit-history irrespective of your marital status. Holding a joint account with your partner does not have any impact on your score. 

Myth 7: Bad credit score will stay the same forever

Your credit score will not stay the same always. You can always work towards improving it by practicing good and responsible credit behavior. 

Few steps that will help you increase your Credit score:

  • Don’t delay your credit card and loan EMI payments
  • Don’t use a credit card for making every purchase.
  • Ensure you don’t swipe more than 30% of your credit limit each month
  • Maintain a healthy financial loan bag i.e. mix of secured and unsecured loans
  • Don’t make multiple loans and credit card inquiries
  • Review your credit report each month
  • Don’t become a loan guarantor for your friend or family member if you think there are high chances of them defaulting on the payment. This is because if the borrower fails to make the payment it can have a negative impact on your score and you would be responsible for paying off the loan EMIs if the primary account holder is unable to pay off.

Also Read: Tips to Increase your Credit Score

Myth 8: Being a loan guarantor or does not impact your Credit score

Fact: If the primary account holder fails to pay off the loan, it is the loan guarantor who is held responsible to pay off the loan. In the event of default made by the primary account holder, it is also the guarantor’s credit score that has an impact.

Myth 9: CREDIT score increases if Income Tax Return is filed on time

Fact: Your Income Tax Return filing is not related to your Credit score in any way. It is important you work towards improving your credit behavior to improve your score.

Myth 10: CREDIT Score can be checked by anyone, anytime

Fact: CREDIT score can only be checked by lending institutions if you apply for a loan or credit card

Myth 11: Loan foreclosure has a high impact on your CREDIT score

Foreclosing of a loan or credit card debt reflects responsible credit behavior, thereby improving it

Myth 12: Credit card closure does not impact your credit score

If you have maintained a good repayment record and hold no outstanding on the card then you shouldn't close the card. If you have an old credit card for which you have made all the repayments on time then closing the same means you would lose on the strong credit history that you have built. 

Myth 13: Checking credit score decreases it

While multiple credit inquires do have an impact on your score, but if you check report by yourself your credit score does not decrease. In fact, regular checking of the credit report is healthy as it helps you understand the mistakes in the report. 


Being aware of the above Credit score facts is imperative as it helps you stay more responsible with your credit and guides you on the mistakes you should avoid doing. You will have no reason to worry about availing fresh credit when you require it as the score combined with various other factors will help you fetch a high amount at a low rate of interest. Be responsible financially to ensure you maintain a healthy financial future. 

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