9 Common Myths about CIBIL Score for Personal Loan

The Credit Information Bureau of India Limited (CIBIL) collects information about your debts from your credit institutions and calculates your credit score. Your CIBIL score immensely influences the approval of your personal loan. Here are nine common myths about the CIBIL score for personal loan debunked to help you understand the fundamental factors that decide your score.

1. Your CIBIL score gives you a better understanding of the factors that determine your creditworthiness. It helps you to take steps to boost your score and secure a sizeable personal loan.Your CIBIL score depends on how many credit accounts you have and how well you are managing them, and not on your income. However, your monthly income affects the amount and interest of your personal loan.Different types of secured and unsecured credits registered on your name impact your credit score. In the absence of an unsecured revolving debt line like a credit card, your portfolio might lack a healthy credit mix and lower your credit score.If you regularly repay your outstanding debts on time, your CIBIL score will improve, increasing your chances of availing a personal loan.Whenever you apply for a personal loan, the lender inquires about your credit history. It lowers your CIBIL score even if the application is rejected.Multiple loan applications make you appear as credit hungry, reducing your credit score.Apart from checking your CIBIL score for personal loan approval, lenders consider your income, your job profile, and other factors and can sanction a personal loan, although at a higher interest rate.If you use your personal loan to consolidate higher interest rate debts, it can increase your CIBIL score.Foreclosing a credit line is viewed as responsible credit behaviour and improves your credit score.

Focus not on myths, but on maintaining a good CIBIL rating to increase your loan eligibility, and avail finance whenever in need.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.