Credit Score

Rajeev is a middle-aged banker and has recently started using a credit card. He is a person who is wary of excessive debts and is aware of the interest charges being levied on credit card debt. And some of his family members have advised him to pay off the credit card outstanding as soon as possible, so he does not even wait for the bill date, he ends up making multiple payments during the month.  

There may still be a lot of individuals who do not understand what a credit score is and its importance in our lives. And there may be many more who know about credit scores but not about the role it plays. Whether we accept it or deny it, credit score does play a big role in our financial lives, unless someone manages to live their entire life without credit.  

If you notice, you would not like to lend money or any of your personal belongings to a complete stranger as you have no guarantee over if your money or belongings will be returned or taken care of in the right manner.  

A credit report is an important part of any individual's financial journey. It is important because we all come across the need for credit one or the other time in life. It may be for a purchase of an asset like a home or a vehicle, to fund education, meet emergency situations like medical emergencies, funding a wedding, a holiday, or to ease the crunch at the end of the month.

Rajesh is a software professional based out of Hyderabad. He had just started working and had moved to Hyderabad from his town. On his outings to the malls, there were always people asking him to apply for a loan or credit card. Without giving much thought, he applied to all that was offered to him. He even applied for loans offered over the phone or email. 

Just after you finish your studies, you enter a job and start you career. Your responsibilities increase, you start to pay your bills and take care of all your expenses. On certain instances, you may have to approach a bank for a loan to manage an immediate financial obligation. Now is the time for you to become familiar with the term ‘Credit Score’.

Credit is extremely important for achieving many of your goals and sail through the phases of emergencies that can be caused due to a number of reasons. To attain the right credit at the right time, having a good credit score is imperative. Credit Score is all about your behavior with credit. 

The knowledge of credit score is quite common nowadays. There is a lot of awareness and interest among the individuals to know and build their credit scores. Everyone looks to have the perfect credit score that can make credit easily available as and when required.  Having easy access to credit can help you own assets like house, vehicles, fund your entrepreneurial ambitions or sail through periods of emergency.

It is simple to understand that your might not application get approved every time you apply for credit. Though rejection feels bad, you must go deeper and find out the cause of rejection so that you do not commit the same mistake again.  

Lending is a risky business, especially when there is no means of knowing if the borrower is worthy of the credit they are applying for. In the absence of information that helped the banks / financial institutions make informed decisions, Non-Performing Assets (Defaulted Loans) were common. So, to avoid this, each bank was coming up with their own ways of making the credit decision using scoring models for their own customers. 

Having a good credit score not only makes it easier for you to land loan and credit card approvals but get them on favorable terms like a lower rate of interest, lower down payment, etc. While we know that your earlier credit-related factors are responsible for your credit score, let us see how credit cards, in particular, affect your credit score. 

Trade Credit is an important lifeline of running a successful business. Allowing payment on credit to your customers and paying in advance to your vendors are some of the usual ways of working of a business.  

Just like a good diet and fitness can give you great health, good credit score has beneficial effects as well. Some of them are quick loan approvals, lower rates of interest and other favorable terms on credit. And a bad credit score does just the opposite. Rejected loans, higher interest rate, etc may be some of the detrimental effects of a bad credit score.  

It is common knowledge that the business entity and individuals representing the business are two different entities; their personal actions do not affect the running of the business. Similarly, the business credit scores and personal credit scores are different, right from the way they are computed to the way the scores are being represented.  

The importance and relevance of credit score is well known now. Credit Score is an indicator of your creditworthiness issued by credit bureau. It ranges between 300-900 with higher scores indicating higher levels of creditworthiness.  This is one of the first and decisive factors that a lender looks at before deciding on your loan/credit card application.  

Year 2017: Raj of Mumbai got into financial difficulties and he had availed 2-3 loans for his business. He found it very difficult to pay EMIs on all of them on time. While he somehow managed to clear of 2 of those loans, he just could not pay the third loan. After giving a lot of time, his bank agreed to settle his loan of Rs 50000 by paying Rs 40000 only.  

Anyone looking to obtain any kind of credit just cannot avoid knowing about credit score or credit report. There is a lot of awareness built around the subject and individuals are increasingly keeping themselves updated of their credit scores.  

Jitesh Shah is a happy go lucky young media professional starting out his career in Mumbai. He was very ambitious and spent long hours at work and hung out with his friends during free time.  Financial matters did not seem important to him. He was regularly maxing his credit card, missing loans EMIs, and when he ran out of cash, he was quick to apply for another personal loan.  

Your credit score plays an important role in determining your creditworthiness. Lenders access your credit score before your loan application is processed for approval. Based on your credit score, the approval and interest rate are determined. A credit score is generated only when an individual becomes a borrower with banks or NBFCs.  

Credit scores range between figures of 300-900 with the higher scores signifying better grade of creditworthiness.  A credit score is the indicator which conveys to your lender the probability of you defaulting your next loan/credit card outstanding bill.  With a good score, the lender will know that you are a creditworthy borrower.  

We Indians are fond of gold. Not only does gold hold investment value, culturally we show an affinity towards gold. In fact, a study by the World Gold Council in 2017 revealed that Indians households, form the world’s largest hoarders of gold, holding a record 23,000-24,000 tonnes of the precious metal, worth at least $800 billion. Though the fancy for this metal has decreased after demonetization, gold still holds a strong place here.