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Top 10 CIBIL Score Myths That Could Be Hurting Your Loan Eligibility

07 Aug 2025 by Team FinFIRST

CIBIL Score Myths vs Facts – IDFC FIRST Bank; Common Credit Score Misconceptions

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Busting credit misconceptions with facts — and showing you how to stay loan-ready with IDFC FIRST Bank

Your CIBIL score isn’t just a number, it’s your financial reputation. Yet, most people still rely on second-hand advice and outdated credit beliefs that can silently hurt their personal loan chances. At IDFC FIRST Bank, we believe in credit empowerment. Here are 10 common myths that could be holding you back from faster approvals, lower interest rates, and better loan terms.

READ MORE

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A complete guide to getting instant approval on digital personal loans

Myth 1: Checking your own CIBIL score reduces it

Fact:
This is one of the most common myths. When you check your credit score, it’s considered a soft inquiry and it does not impact your score. Only hard inquiries made by lenders during a credit application affect your score.

PRO Tip:
Check your credit score at least once every 6 months to spot errors and track progress.

Myth 2: Closing old credit cards improves your score

Fact:
Older cards help build your credit history. Closing them shortens your credit age which can reduce your score, not raise it.

Instead: Keep old credit cards open with zero balance or occasional use to maintain a long credit trail. However, do check if you are required to pay any hefty annual fees for keeping the card.

Myth 3: Higher income = higher credit score

Fact:
Your income doesn’t directly impact on your CIBIL score. The score reflects your credit repayment behavior, not your salary.

Even a ₹20,000/month earner with perfect repayment can have a 750+ score, while a high-income borrower with defaults may have a poor score.

Myth 4: Defaulting once won’t matter much

Fact:
Even a single late payment or EMI bounce is reported and can lower your score, especially if it’s a personal loan or an unsecured credit.

FIRSTmoney insight:
Your repayment consistency is critical for personal loan approval at better rates like 9.99% p.a.

Myth 5: Using your full credit limit improves your credit score

Fact:
If you consistently use 80–100% of your credit card limit, it signals credit stress. This high credit utilization ratio can damage your score.

Tip: Try keeping utilization under 30% of your total credit limit.

Myth 6: Paying minimum due is enough

Fact:
Paying only the minimum on your credit card can lead to rolling balances and interest compounding often above 30–42% p.a. It also indicates financial stress.

Always pay your total due amount, not just the minimum.

Myth 7: Settling a loan = clearing it

Fact:
Loan settlements (where you pay less than the due amount) are reported as “settled” which negatively impacts your credit report for up to 7 years.

Better: Speak to the bank for a restructure, not settlement.

Myth 8: CIBIL score updates instantly

Fact:
CIBIL reports are updated monthly. So even after clearing dues, it may take 30–45 days for any improvements to reflect in your credit score.

Track changes patiently and ensure your bank has reported the update in your credit profile correctly.

Myth 9: All loans affect CIBIL score the same way

Fact:
Credit cards, personal loans, and home loans impact your score differently. Unsecured loans (like personal loans) carry higher risk, so repayment history here weighs more.

At IDFC FIRST, we look at loan mix, credit age, and score movement not just the score itself.

Myth 10: You can’t get a personal loan below 750 CIBIL score

Fact:
While higher scores get better rates, banks like IDFC FIRST consider applications starting from 700+, especially if your income is stable and documents are strong.

Bonus: With CIBIL scores above 730, you may qualify for FIRSTmoney Personal Loan starting at 9.99% p.a., with no foreclosure charges.

How FIRSTmoney Personal Loan Rewards Good Credit Behavior

Borrow from ₹50,000 to ₹10 lakhs
Competitive interest rates from 9.99% p.a.
No hidden charges or pre-closure fees
100% digital journey with fast disbursal
Personalized offers based on credit profile

Final Checklist: Are These Myths Holding You Back?

Myth Busted

You avoid checking your own score

You closed your oldest credit card

You pay only minimum credit card dues

You recently “settled” an old loan

You always max out your credit limit

If yes, it’s time to clean up your credit strategy.

Want to Improve Your Score Fast?

Start with:

Timely EMI and credit card payments
Lowering your credit utilization
Diversifying your credit type
Monitoring your score regularly

Then apply for a FIRSTmoney Personal Loan that supports your goals without punishing your progress.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

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