Credit Score Myths:
In today’s world, loans have become common due to rising expenses and growing needs. Banks provide loans based on a person’s credit score, also called CIBIL score. However, there are many myths that stop people from getting loans, even when they are eligible. Here are 5 common myths and the truth behind them:

Credit Score Myths:
1. High Income Means High Credit Score
Many people think if they earn a good salary, their credit score will also be high. This is not true. A credit score is based on your payment history, how much credit you use, and your credit mix — not your income alone.

2. Checking Your Own Credit Score Lowers It
Some think that checking their own score will reduce it. But this is a soft inquiry and does not affect your credit score. However, when banks check it (hard inquiry), it may drop a little.

3. Closing Old Credit Cards Helps
Closing old credit cards may harm your score. It reduces your credit history and increases your credit utilization ratio. It is better to keep old cards active and manage them wisely.

4. Paying Loans Early Always Helps
Paying loans before time is good, but what matters more is regular and on-time payments. A steady record helps more than one-time early payments.

5. No Credit History is Good
Some believe having no loans or credit cards is best. But lenders can’t judge your reliability without history. So it may actually reduce your chances of getting a loan.

Tips to Improve Credit Score:

Always pay EMIs and credit card bills on time.
Keep credit usage below 30% of your limit.
Avoid applying for many loans at once.
Check your credit report regularly and fix any errors.

A good credit score can open many doors for you. So, clear your doubts, manage your credit smartly and make wise financial choices!

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