Independent Day: How to be financially independent with a good credit score

by Jeremy

Loans have become an integral part of our lives, especially since the pandemic started. Various banks, NBFCs, and fintech players have started giving out loans to people in need, but some people still face trouble getting loans due to low credit scores or no credit scores. It may be noted that a credit score is something Indians tend to ignore generally. A borrower’s credit score will probably be checked everywhere, be it a home loan, education, or any other loan.

 

According to industry reports, almost 6 out of 10 millennials are rejected when applying for credit cards, mortgages, car loans, and other financial products. Millennials aged between 23 and 38 years are the ones that experience higher denial rates than different generations.

Vineet Patawari, Co-founder, CEO of financial market learning portal Elearnmarkets.com and stock market analytics platform StockEdge, says, “This pandemic is a testament to the importance of Financial Independence in our lives. The future is uncertain and certainly requires sound financial planning. Having a good credit score is necessary for easy approval of a loan.”

So, what is the Credit Score?

This instrument was first introduced by Fair Isaac Corporation but has now gained worldwide popularity. To put it simply, a credit score is a numerical figure obtained from a person’s credit files to represent how worthy they are for any credit instrument.

Patawari says, “A credit score generally ranges from 300-850, based on factors like total levels of debt, number of open accounts, repayment history, etc. Any score above 650 is considered to be good, and the person may be eligible for low-interest rates.”

Having a good credit score goes a long way. Experts say a good credit score is a gateway to a smooth financial life. That is the reason many individuals actively seek information to manage their creditworthiness. To improve one’s creditworthiness, experts say repaying loans on time is a great way to start.

How can you improve your credit score?

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