Monday, 9 February 2015

Things that don’t hurt your CIBIL score

Nowadays people have been extremely careful about their credit health so as to secure better loans with low interest rates. But mostly such people focus on what affects their credit score and ignore certain myths about things that supposedly affect their credit scores when they don’t. It’s necessary to know about what things don’t affect your CIBIL score so that you don’t waste time fretting over them.

It may be surprising for people to know that income doesn't direct affect your credit score. Creditors know about your income from your application, not from your credit report. Income doesn't negatively affect your credit score but lenders would take your income into account to determine whether you would be able to make payments in future.

Personal Information:
Name, Address and birth date is included in your credit report but other than that your education level, marital status, race, age and gender won’t have an effect on your credit rating whatsoever nor would they be taken into account to calculate your score.

Checking your credit report:
This is the biggest myth among people. Checking your credit report is good financial practice and checking it at regular intervals won’t affect your credit score in a negative way but rather help you know more your credit health.

Application for credit rejected: 
When banks turn down your credit card or loan application, people believe that your credit report is affected. But this is a myth, your credit report doesn't show if an application is declined or approved. Yes there would be enquiries against your report when you apply for these loans, but being approved or rejected won’t affect you credit score.

Paying bills of other people and small merchants:
Bill payments to small businesses don’t help build your credit score because most probably they won’t even show up on your credit report. Credit bureaus have strict requirements about who reports information to them and usually small businesses don’t fit in those requirements.

Also paying off somebody else’s bill won’t have any effect on your credit score. When a bills gets paid, it doesn't matter who paid it, the payment would get reported on the file of the person who borrowed the money.

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