New Delhi, June 1 -- To offer further respite to borrowers, the Reserve Bank of India (RBI) on 22 May extended the moratorium on repayment of term loans by three months till 31 August 2020. The central bank emphasized that the moratorium will have no adverse impact on the credit score of borrowers opting for the deferment of loan repayment. Since then, credit scores have become a topic of discussion, but there are a host of myths that surround them.

A credit score is a three-digit number that reflects the creditworthiness of a consumer. "Lenders use the score of an individual to understand the probability of the consumer being able to repay the loan before they approve or decline the loan application," said Ashish Singhal, managing direc...