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CIBIL Report and Its Myths

It’s a great challenge to borrow a home loan without a proper guidance. Though various options are available in the market and the borrower can easily go through them via internet. Even after getting the complete information about the basic criteria to borrow, there can be some misleading statements that can misguide or confuse the borrower.

The important point where the borrower can find himself into a hurricane situation is the CIBIL Report. The first time borrower and even the existing borrowers may get worried about their CIBIL Reports like our kids are scared of their exam results. This is the result that reveals your past.

The CIBIL report states your credit history, your credit worthiness and shows your efficiency of handling your finances and past liabilities. The CIBIL report plays a vital role in the financial journey of the borrower. It brings a transparency in lender’s mind to decide the credit for home loans. If the borrower receives information from the lender that the home loan application has been rejected due to some serious discrepancy in your CIBIL report, the words cannot be recorded as a face value for the same. The borrower can actually check the CIBIL report and judge why the application was rejected and what corrective measure to be taken to improve the credit score so as to be eligible for borrowing the home loan.

Let’s read more and learn more about the myths about the CIBIL report:

Myth: Low credit score means no home loan

Fact: This is the biggest myth which is associated with CIBIL score. There are lenders that offer loans to the low score borrowers. Their credit policies may be different from the high scorers. If your home loan application is rejected due to low score, find the exact reason behind the rejection and approach another lender with the required and supporting documents to justify the problem. Little high fees and other charges may compensate a low CIBIL score.

Myth: CIBIL is only for home loans

Fact: It came as a big surprise to me after knowing that many applicants still thinks that CIBIL score is only important for home loan approvals. Though, it is not true. The CIBIL score is established only after reviewing the credit history of your debt payments, credit card payments and other payments towards other loans. The CIBIL reports are not only the matter of concern for the Banks/ NBFC’s and other financial institutions. It also enables the borrowers to balance their financials in a disciplined manner and increase the chances of borrowing any form of credit. A healthy credit score and credit history leads you towards a healthy credit for future.

Myth: CIBIL score is affected due to investments and assets

Fact: While discussing with friends and relative who are not completely educated about the facts we also get the impression of the myth that investments and assets affect our CIBIL score. But again, this is not true at all. The CIBIL report only consists of the details about your loans and credit cards and is not based on your savings, assets and investments. The CIBIL report is only influenced with any unpaid or delayed payments of your EMI’s.

Myth: Defaulters are maintained by CIBIL

Fact: This is another popular myth which is believed by the loan applicants. If a lender is looking to find any default regarding any loan or credit card, it can easily be found in CIBIL report but in case, if someone is looking for the defaulter’s list, then it is a wrong place to look for. CIBIL does not record the lift of defaulters in terms of any debts. Banks/ NBFC’s and other financial institutions evaluate the CIBIL report as per their credit policies to understand the borrower and decide whether to grant a loan or not.

Myth: Negative CIBIL is best

Fact:  Applicants believe that the negative credit score (-1) is the best asit reflects no credit history. The negative credit history means that the applicant has never borrowed any credit before. However, Banks/ NBFC’s and other financial institutions look forward for some form of credit behavior so as to ensure about the credit behavior pattern of the borrower to move ahead with loan application. A clean and clear repayment track is more dependable than no credit history at all.

Myth: Rechecking of CIBIL score will negatively affect the credit score

Fact: Many home loan borrowers fear of checking their CIBIL score and report at regular intervals in a year as it may negatively affect the credit score. In fact, it is advised to check the CIBIL report at regular intervals to know about the facts or defaults and especially if the borrower have different debts or running loans. For instance, if the EMI of your home loan is delayed due to any technical operational reasons in the bank (and not due to any careless handling or lack of funds at your end) you must check your CIBIL report. If you are regularly updated about the status of your credit report, after 2-3 months you will get to know if there are any DPD’s (days past dues) reflected in your CIBIL report. With the above scenario, your credit report will be adversely affected for no fault of yours.


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