Cibil rating is a credit information company which maintains record of individual’s debt and credit cards. CIBIL stands for credit information bureau of India limited. CIBIL is the most trusted authority that publishes credit information reports and cibil score that serves as an indicator for individual’s repaying capacity. But, over the years some myths have gained ground about cibil. Let us bust these myths one by one –
- Low cibil score means no credit for lifetime – This is a common myth regarding cibil score going around for long time. No doubt, cibil score is one of the most important factor in loan appraisal at financial institutions but, different institutions have different credit policies. There are large number of institutions that don’t consider a low cibil score as no go area.
- Cibil score maintains data of defaulters – CIBIL doesn’t maintain a record of defaulters with itself. It just collates information from different banks and financial institution and publishes it as it is.
- Cibil rating is authorized to change credit report – CIBIL cannot change any individual’s cibil score or credit report unless approved by banks or financial institutions. CIBIL is only facilitate the process, this myth about cibil is one of the most damaging from borrower’s point of view.
- Cibil score is affected by investments – A credit information report (CIR) is collection of records pertaining to only loans and credit cards. Cibil score doesn’t factor in any investments, saving account, fixed deposits etc for its calculations.
- Cibil rating is the only decision criteria for banks – This is also one
of the most common myths about cibil. No doubt, cibil score is one of the important criteria but banks also consider many other factors like business model, experience, banking records etc for credit appraisal purpose.
- No Cibil score is ideal score – Banks look for a good repayment track records over the years. Some borrowers think that a no credit record would help them getting past cibil barrier but you should always know that a good cibil score is always better than a no cibil score.
Above list is an exhaustive representation of common cibil myths. But, as a serious borrower, you should always make out a difference between what is a myth and what is a fact. A cibil score is just reflection of your past behavior towards debt and it is in your hand to make sure that it always stay above 750 for better negotiations during credit appraisal process.