Credit Scores 6 MYTHS Debunked

Borrow at better rates by maintaining a Good Credit Score

There’s a lot of conflicting information and even well-intentioned advice that can turn out to be wrong, so it’s no surprise that credit score myths are aplenty. There are two parts to this story- Credit score and Credit report. 

A credit score is a three digit number based on the information acquired from the credit report of a person. 

A credit score is a number that ascertains your creditworthiness. It is a three-digit number that allows banks and other non-banking institutions to evaluate how likely you are to repay your debt. Credit scores usually range between 300 and 850. 

A credit score is based on your credit report. It predicts risk for banks and other NBFCs.

So let’s look at the common myths that we fall prey to most often:


MYTH 1- I can take any amount/ any number of loans from any number of MFIs

Truth:As per regulations by RBI,
1.  maximum loan amount that can be granted to an MFI borrower has been limited to 1.25 lac
2.  a maximum of 2 MFI loans can be availed by borrower at one point of time
Hence, if any of the above situation is achieved, loan would not be granted to borrower

MYTH 2 There is no relevance of credit scores for MFI borrowers:

Truth:With the continuous change in landscape of MFI industry and regulations by RBI, Credit bureaus are generating credit scores for MFI borrowers which is impacted by number of loan accounts, outstanding balance, payment history of borrower, etc. While granting the loan to the borrower, credit score is one of the parameters for MFIs to evaluate the application and loan sanction

MYTH3  MFIs do not charge penalty hence I can have irregular pattern of payment or delay my payments

Truth:     All credit bureaus (Equifax, CIBIL, High Mark and Experian) maintain the track records of frequency and Interval of payments together with frequency of defaults/late payments which affect your credit history and credit score and many financial institutions may decline a loan basis such record

MYTH 4 - Payment pattern or defaults will take time to impact the credit history

Truth: As per latest guidelines on credit reporting to bureaus, customer credit details are reported every day, hence, even a single default/delay of payment will impact the credit score and history. However, there could be genuine reasons for borrower for such delay which could be corrected by borrower by clearing the payments quickly

MYTH 5 - Commission agents can help me to correct my credit score.

Truth:Responsibility of a good credit score and history lies with you only. No commission agent can help you to achieve a good credit score if you have defaulted on payments. 
However, a bad credit score doesn’t stay forever if you make real efforts for paying off your debts

MYTH 6 My income, bank accounts and investments impact my credit score

Truth:No information about your income, bank accounts or investments is reported to credit bureaus, so they don’t show up on your credit report and won’t impact your credit score. 

(However, items like unpaid bank fees sent to collections will show up.)


Credit Score Myths Debunked by Satin (South)



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