A high credit score is necessary in today’s financial environment for several reasons, including acquiring a loan and paying less interest. However, a lot of false information exists about how to check your credit score and how it affects your financial stability. This article seeks to dispel widespread misconceptions and present accurate information about credit score checks and the function of personal loan apps in India.
Myth 1: Credit score is lowered when it is checked
The most pervasive fallacy is that credit score checks hurt credit scores. This error results from misinterpreting what constitutes a “soft inquiry” and a “hard inquiry.”
Fact: A soft inquiry happens when you look up your credit score on your own or when a lender looks up pre-approval offers. It has no bearing on your credit score. On the other hand, a hard inquiry might temporarily reduce your score when a lender examines your credit record as part of the loan or credit card application process. Using a trustworthy personal loan app in India to monitor your credit score regularly will guarantee that you remain informed without suffering consequences.
Myth 2: Credit scores are the same for everyone
When many scores are given, it might need to be more evident since many people think there is just one universal credit score.
Fact: Different lenders may utilize distinct credit rating methodologies. Additionally, credit scores might differ significantly based on whose credit agency provides the report. Knowing which scoring model and bureau are being utilized is crucial when one check credit score with an Indian personal loan app.
Myth 3: The only free credit score check you can do is once a year
The idea that you may only get one free credit score check annually is another widespread misconception.
Fact: Although you may obtain a free credit report annually from each of the major credit agencies by visiting AnnualCreditReport.com, most Indian banks, credit card companies, and personal loan applications provide free credit score monitoring services every month. This enables you to routinely and for free keep tabs on the state of your credit.
Myth 4: Your credit score increases when you close old accounts
Some people think that simply streamlining their credit history, lowering the amount of credit accessible, and canceling old credit accounts would raise their credit scores.
Fact: Closing old accounts may improve your credit score. Your credit score is determined in part by the duration of your credit history. Maintaining the status of old accounts, even if they are not being used, might help lengthen your credit history. Using a personal loan app in India to check your credit score frequently offers information on how to manage your accounts successfully to keep your score high.
Myth 5: Your Credit Score is affected by your income
There is a false belief that your income level directly impacts your credit score.
Fact: The credit score is maintained based on the records of all your previous transactions: payment history, credit usage ratio, credit history’s length, kinds of credit accounts, and recent inquiries. Your income has no say in your credit score. However, when offering a personal loan, the lender may take account of your income if you are applying through an Indian personal loan app.
Financial health requires knowing how to check credit score and separating reality from fiction. Using a trustworthy personal loan app in India, you may obtain current, precise information about your credit score without any harmful effects. By busting these widespread misconceptions, you may make wise judgments that will improve your creditworthiness and financial future.
