In the world of personal finance, few numbers carry as much weight—and confusion—as your credit score. For something that affects everything from your ability to get a loan to the interest rates you’re offered, it’s surprising how much misinformation floats around about it.
A credit score is a three-digit number, typically ranging from 300 to 900, that represents your creditworthiness. It’s calculated based on your borrowing behavior, payment history, credit utilization, and other financial habits. In India, credit scores are provided by major bureaus like CIBIL (TransUnion), Experian, Equifax, and CRIF High Mark.
That’s why this blog exists. To separate fact from fiction, bust the biggest credit score myths, and guide you with clear, actionable information. Whether you’re applying for your first credit card or trying to bounce back from a financial hit, this is your reality check.
In India, you don’t have just one credit score—each of the four licensed bureaus CIBIL, Experian, Equifax, and CRIF calculate their own scores using the same data but different algorithms. These scores aren’t updated instantly; there’s usually a 30–45 day delay after your billing cycle before new activity is reflected. |
10 Biggest Myths About Credit Scores & Facts
Myth 1: Checking your own credit score lowers it
Truth: This is one of the most common credit score myths. When you check your credit score for personal awareness (called a soft inquiry), it has zero impact on your score. Only hard inquiries—such as when a bank or lender checks your credit for a loan or credit card application—can slightly affect your score.
Myth 2: Paying off a loan early will hurt your credit score
Truth: Paying early might affect your credit mix (i.e., types of credit in use), but it won’t harm your score. Some lenders may spread this myth to avoid losing interest income.
Myth 3: Using a credit repair agency is the fastest way to fix bad credit
Truth: Most of what credit repair agencies do, you can do yourself—at no cost. Many services charge high monthly fees to send dispute letters you could write online in 5 minutes.
Myth 4: Having multiple credit cards automatically makes you financially irresponsible
Truth: Multiple cards aren’t the issue—misuse is. If you use them wisely and pay off the balance in full, having more cards can actually help your score.
Myth 5: Closing old credit cards improves your score
Truth: Closing old or unused cards can actually lower your credit score because it reduces your average credit age and increases your credit utilization ratio, especially if the card had a high limit. Keep your oldest cards open—even if you rarely use them.
Myth 6: One missed payment isn’t a big deal
Truth: Just one missed payment can knock 50 to 100 points off your score, particularly if you’re new to credit. Payment history is the single most important factor in your credit score. Even a small delay can have a lasting impact.
Myth 7: Credit scores are the same across all platforms
Truth: Each credit bureau (like CIBIL, Experian, or Equifax) has its own scoring algorithm. Your score can differ slightly across platforms. That’s normal—but all scores should be within a similar range if your credit history is consistent.
Myth 8: Married couples share a credit score
Truth: There’s no such thing as a “joint credit score.” Even if you share finances or apply for a joint loan, your credit score is individual. Your spouse’s credit behavior has no direct effect on your personal score.
Myth 9: Debit card usage builds credit score
Truth: Debit cards are linked to your savings account, not credit. So, they don’t show up in your credit history at all. Only credit-based products—like credit cards, personal loans, or EMIs—impact your credit score.
Myth 10: Only loans and credit cards affect your score
Truth: New-age credit like Buy Now, Pay Later (BNPL) services, digital credit lines, and utility payment records can impact your report—often without you realizing it.
Reasons Why These Credit Score Myths Exist
Despite how important credit scores are, they remain one of the most misunderstood parts of personal finance. That’s not a coincidence. There are a few real-world reasons why myths around credit scores continue to circulate, especially in markets like India where financial literacy is still evolving.
• Credit is Still a Taboo Subject in Many Homes
Parents often encourage saving but rarely talk about managing credit responsibly. As a result, young adults enter the credit system with zero context, leaving them vulnerable to assumptions and misinformation.
• Financial Literacy Isn’t Formally Taught
Unlike school subjects like math or science, credit scores and financial management aren’t taught in most educational systems.
• Social Media and Clickbait Create Misinformation Loops
Many influencers and blogs oversimplify credit score advice just to get clicks. Phrases like “Do this one thing to boost your score 100 points” sound attractive but are rarely true.
Ways to Actually Improve Your Credit Score
Now that you know what not to believe, it’s time to focus on what actually works. Improving your credit score isn’t rocket science—but it does require consistency, awareness, and a bit of patience.
Here are five tried-and-tested habits that make a real difference:
♦ Pay Your Bills on Time
This is non-negotiable. Your payment history makes up the largest portion of your credit score—typically around 35%. Even one delayed credit card bill or missed EMI can lower your score by several points. Set auto-debit reminders or calendar alerts to avoid slip-ups.
♦ Keep Your Credit Utilization Below 30%
Credit utilization refers to how much credit you’re using versus how much is available. For example, if your credit limit is ₹1,00,000 and you’ve spent ₹80,000, your utilization is 80%—which is high.
To improve your score, keep your usage at 30% or below. If you regularly hit the limit, consider asking your bank for a limit increase (without increasing your spending).
♦ Don’t Apply for Multiple Loans or Cards at Once
Every time you apply for credit, it triggers a hard inquiry—which temporarily lowers your score. Applying for multiple loans or cards in a short time signals desperation and reduces your creditworthiness.
♦ Keep Your Oldest Credit Card Active
The length of your credit history adds trust to your profile. Even if you don’t use your oldest card often, keep it open and make small purchases once in a while. Canceling it can shorten your average account age and increase your utilization ratio.
♦ Check Your Credit Report Regularly
It’s not just about your score—you should also monitor your credit report for errors, such as:
- Wrong account details
- Duplicate entries
- Closed loans showing as active
Conclusion
Credit scores are more than just numbers—they’re a reflection of your financial habits, discipline, and awareness. But when myths dominate the conversation, even the most well-intentioned actions can lead to poor results.
Building a strong credit score is a journey—not a sprint. With consistent repayment, low credit utilization, and a watchful eye on your report, you’re already on the path to better financial opportunities.
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Frequently Asked Questions
Q: Do we really need credit scores?
Yes, credit scores are essential for getting loans, credit cards, and better interest rates.
Q: What is the biggest killer of credit scores?
Missed or late payments are the biggest factor that negatively impacts your credit score.
Q: What are the three most common credit mistakes?
Late payments, maxing out credit cards, and applying for too much credit at once are common mistakes.
Q: What are the 5 factors of a credit score?
Payment history, credit utilization, credit history length, credit mix, and new credit inquiries.
Q: What reduces credit score?
Missed payments, high credit usage, loan defaults, and frequent hard inquiries can reduce your score.
Q: Can I have multiple credit scores?
Yes, different credit bureaus like CIBIL, Experian, and Equifax assign separate credit scores.
Q: Will closing a credit card improve my credit score?
No, closing a credit card may lower your score by reducing available credit and shortening credit history.
Q: Will checking my credit report once or multiple times lower my credit score?
No, checking your own credit report is a soft inquiry and doesn’t affect your credit score.
Q: Will a missed payment reduce my credit score drastically?
Yes, a single missed payment can significantly lower your score, especially if it’s overdue by 30+ days.
Q: Does the minimum credit card payment affect your credit score?
Paying at least the minimum keeps your score safe, but paying in full is better to avoid interest and boost credit health.