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10 CIBIL Score Myths That Are Costing You Money

Rahul Godeshwar's profile photo Rahul Godeshwar
4 min read
Reviewed by Gautam Chauhan Last reviewed 13 October 2026 Data verified 13 October 2026
CIBIL credit-score

Why CIBIL myths persist

The CIBIL score is poorly understood in India. Most people have never seen their report. The few who have rarely understand the algorithm. Banks do not volunteer the details. Fintech apps exploit the confusion with marketing. The result: myths that lead cardholders to make worse decisions.

Myth 1: a high income means a high CIBIL score

Wrong. The CIBIL score is calculated from credit behaviour, not income. A ₹50 lakh per year earner with no credit history has a CIBIL score of NA. A ₹3 lakh per year earner with 5 years of on-time credit-card payments has a score of 780+.

Income is a separate input. Banks use it to determine eligibility for cards and loans. It does not calculate the score. The two are independent.

Myth 2: UPI transactions affect your CIBIL score

Wrong. UPI transactions are bank-to-bank transfers. They do not appear on your CIBIL report. Only formal credit products (credit cards, personal loans, home loans, auto loans) are reported.

UPI is invisible to CIBIL. So is cash, debit card transactions, wallet loads, and bank transfers.

Myth 3: using a debit card helps your score

Wrong. Debit card transactions are not credit. They are not reported to CIBIL. They do not help or hurt your score.

If a fintech app claims using a debit card builds your credit score, be skeptical. The mechanism is usually a side product (a credit card or a small loan) that gets reported. The debit card itself is irrelevant.

Myth 4: closing old credit cards helps your score

Wrong. It usually hurts. Your oldest card contributes to your credit age. This is the second-most important factor in your score. Closing your oldest card shortens your credit history. Your score drops 10–30 points.

The only time to close an old card is when the annual fee exceeds the value and you cannot get it waived. Otherwise, keep it.

Myth 5: paying only the minimum amount due is fine

Wrong, and dangerous. Paying the minimum avoids the late fee. But finance charges continue to accrue on the carried balance. Worse, paying only the minimum can be reported to CIBIL as a minimum payment. That pattern is slightly negative for your score.

The rule: pay the full statemented balance by the due date. The minimum is a trap, not a feature.

Myth 6: checking your own CIBIL score lowers it

Wrong. Checking your own score is a soft inquiry. It does not show on your report and does not affect your score. The score is lowered by hard inquiries — applications you make to banks for new credit.

Check your CIBIL report as often as you like. Once a year is a healthy habit.

Myth 7: a settled account is the same as a closed account

Wrong. A settled account is one where the bank agreed to accept less than the full balance as full payment. It is a negative on your CIBIL report and stays for 7 years. A closed account is one you paid off in full. That is positive.

If you are struggling with debt, the right path is to pay the full amount. Settling for less feels like relief. But it is a long-term score penalty.

Myth 8: once you have a bad score, it is permanent

Wrong. Most negative items fall off your CIBIL report after 7 years. Some fall off after 5 years. Your score can recover much faster than that. With 12–18 months of disciplined on-time payments and low credit utilisation, a 600 score can move to 750+.

The 7-year clock matters for legal hygiene. But the score itself is forward-looking. A bank looking at your report today cares more about your last 12 months than your worst moment 5 years ago.

Myth 9: more credit cards always help

Wrong. A small number of well-managed cards (2–4) is better than many cards with low utilisation on each. Adding cards beyond what you can responsibly manage dilutes your focus. It increases the chance of missed payments.

Quality over quantity. Two cards you pay in full every month beats seven cards with a few late payments on the seventh.

Myth 10: the CIBIL report is the only score banks use

Wrong. Banks also use Experian, Equifax, and CRIF High Mark. Each calculates the score slightly differently. The bank looks at the full report and may apply its own internal score on top.

Your CIBIL score is one of several signals. A high CIBIL score is necessary but not sufficient for premium-card approval. The bank also looks at your income, your existing relationship with them, and your credit utilisation pattern.

The bottom line

The CIBIL score is a probability, not a verdict. The behaviours that move it are well-defined: pay on time, keep utilisation low, do not churn applications, and do not close old cards. Everything else — debit cards, UPI, your income — is irrelevant. The myths persist because the algorithm is opaque. The reality is simpler than the myths suggest.

Sources

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