Your CIBIL score decides whether your loan gets approved, what interest rate you pay, and sometimes even whether you get that credit card upgrade. Yet a lot of what people believe about it is simply wrong, and those wrong beliefs lead to decisions that quietly damage the very number you are trying to protect.
Here are five of the most common CIBIL score myths in India, and the truth behind each one.
Myth 1: Checking your own credit score lowers it
The truth: It does not. When you check your own score, it is recorded as a soft enquiry, and soft enquiries have zero impact on your CIBIL score.
What people confuse this with is a hard enquiry, which happens when a lender pulls your report because you applied for a loan or card. A cluster of hard enquiries in a short window can nudge your score down, because it can signal credit hunger. But checking your own score, as often as you like, is completely safe. In fact, checking regularly is one of the smartest habits you can build, because it helps you catch errors and fraud early.
Myth 2: A higher salary means a higher credit score
The truth: Your income is not part of the credit score calculation at all.
Your CIBIL score is built from your credit behaviour, not your bank balance. Repayment history, how much of your available credit you use, the length of your credit history, and your mix of loans and cards are what move the number. Someone earning 15 lakh a year with missed EMIs can easily have a worse score than someone earning 5 lakh who pays every bill on time. Lenders do look at your income, but separately, when they assess whether you can afford a loan. It never touches the three-digit score itself.
Myth 3: Settling a loan is as good as closing it
The truth: A settled account is a red flag, not a clean exit.
When you “settle” a loan, you pay the lender less than what you owe and they write off the rest. That word, settled, then sits on your credit report and tells every future lender that you did not repay in full. It can hurt your score and your borrowing prospects for years.
Closing a loan means you paid every rupee due and the account is marked closed with a clean status. If you are ever offered a settlement, understand that it protects your cash flow today at the cost of your credit reputation tomorrow. Where possible, aim to close, not settle.
Myth 4: No loans and no credit cards means a perfect score
The truth: No credit history often means no score at all, or a thin one that lenders are wary of.
Your score is a track record. If you have never borrowed, there is nothing to track, so the system either cannot generate a score or gives you a limited one. To a lender, an unknown borrower is a risk, not a safe bet. The fix is not to take on debt you do not need, but to build a healthy history: a single credit card used for regular spends and paid off in full each month is one of the simplest ways to establish a strong score over time.
Myth 5: Closing old credit cards improves your score
The truth: Closing an old card can actually pull your score down.
Two things happen when you shut an old card. First, you lose the length of credit history tied to it, and older accounts help your score. Second, you lose that card’s credit limit, which raises your overall credit utilisation ratio (the share of your total available credit that you are using). Higher utilisation tends to lower scores. Unless a card carries a fee you cannot justify, keeping an old, no-cost card open and lightly used usually does more for your score than closing it.
The bottom line
Your CIBIL score rewards consistency, not income or clever workarounds. Pay on time, keep your utilisation low, hold on to your oldest accounts, and check your report regularly. Do that, and the myths stop mattering.
Frequently asked questions
Does checking my CIBIL score reduce it?
No. Checking your own score is a soft enquiry and has no effect on your score. Only hard enquiries from lenders when you apply for credit can have a small impact.
What is a good CIBIL score in India?
Generally, a score of 750 and above is considered good and improves your chances of loan and card approvals at better terms, though each lender sets its own cut-offs.
How long does a settled status stay on my report?
A settled status can remain on your credit report for several years and can affect future borrowing during that time. Repaying in full and getting the account marked closed is always preferable.
How often should I check my credit score?
Checking every few months is a healthy habit. It costs nothing in score terms and helps you spot errors, missed payments, or signs of fraud early.
This article is general financial information and not personalised advice. Your credit profile is unique, so review your own credit report before making borrowing decisions.
