Top 5 credit score myths debunked – And how to improve yours

India’s credit bureaus have long worked to raise awareness among borrowers especially as unsecured lending rises. With growing concern over financial literacy, the regulator aims to bust credit score myths and encourage responsible credit credit use.

On the same issue, Rishabh Goel, Co-Founder and CEO, Credgenics believes that one should be careful with the myths associated with credit scores.

He advises credit users that they should, “Never fall for credit score myths that sabotage your financial health. Many think checking their score damages it, paying the minimum due is enough, or closing old credit cards helps, none of this is true.”

He further added that, “Checking your score is safe and empowers smarter choices. Paying more than the minimum speeds up debt repayment, saving interest and boosting your score. Keeping old accounts builds credit history. By busting these myths, you can take charge of debt repayment and secure a brighter financial future.”

Top 5 credit score myths debunked

1. Myth: Checking your own credit score lowers it.

Truth: False. Only hard inquiries from financial institutions impact your score. Soft inquiries, such as when you check your own score, have no negative impact.

2. Myth: Closing old credit cards or personal loans improves your score.

Truth: Closing long standing cards may reduce your credit history length and this can bring your credit score lower thus impacting your credit profile.

3. Myth: High income guarantees a good credit score.

Truth: Not true. Credit scores only showcase repayment history, not income level. Even high earners can have poor scores if they miss payments.

4. Myth: Paying only the minimum due is enough.

Truth: Misleading. Paying less than the full amount leads to interest charges and can hurt your credit score over time.

5. Myth: No loans mean a perfect credit score.

Truth: Incorrect. Without credit activity, bureaus lack data to assess your creditworthiness, resulting in a low or no score.

RBI pushes for more transparency

To promote accurate and timely credit reporting, the RBI has directed lenders and credit bureaus like CIBIL, Experian, Equifax, and CRIF High Mark to update credit data every 15 days. This reduces the risk of outdated records affecting a borrower's loan eligibility.

5 proven ways to improve your credit score

Want to boost your credit score and bust the myths? Follow these best practices:

1. Review your credit report consistently

• Focus on checking reports from credit bureaus like CIBIL, Experian, etc.
• Dispute any errors immediately.

2. Maintain a healthy credit utilisation ratio

• Keep usage within 25 to 30% of your total allowed limit.
• Avoid unnecessary and impulsive spending.

3. Pay EMIs and credit card bills on time

• Ensure that you pay dues before the due date.
• Timely payments improve your credit profile.

4. Avoid multiple loan applications

• Make applications for new loans only when necessary.
• Too many applications trigger hard inquiries.

5. Keep old credit cards active

• Don’t close old cards, use them occasionally.
• This will help you in maintaining a long credit history.

Credit scores crucial amid slowdown

A recent SBI report revealed a sharp dip in bank credit growth—from 19.5% in May 2024 to 9.8% in May 2025. The downturn has affected key sectors like agriculture, industry, services, and personal loans.

In such an environment, having a clean credit profile and strong score can be the deciding factor between loan approval and rejection.

Why young borrowers must be financially literate

With the rise of digital lending platforms, more young Indians are entering the credit ecosystem. Educating this demographic is critical to building a financially resilient population that can weather economic slowdowns and avoid credit traps.

Conclusion

Busting credit myths is not just about boosting numbers—it’s about building a foundation for long-term financial health. By understanding what truly affects your credit score and taking proactive steps to manage it, you can unlock better loan terms, lower interest rates, and greater financial freedom.

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