Credit Matters, at Every Important Stage in Your Life

Meet Priya, a smart and ambitious girl with big plans for her future. Like any other young adult, she was new to the world of credit and finances and had to learn the importance of having a good credit standing and credit score. Priya's first encounter with the world of credit came when she was in college and needed a laptop for her studies. Her parents suggested taking a loan. However, being a student and having no credit history of her own, Priya’s father stood as guarantor for her and she was granted the amount she needed to buy her first laptop.

As she had never borrowed any money before, that’s when Priya became aware of the concept of credit. Their bank representative explained that a credit history is a record of a person's borrowing and payment activity, further used to calculate their credit score - a three-digit number that reflects a person's creditworthiness. Her bank executive explained how a person’s credit score is used by lenders to assess their ability to repay a loan and that their bank relied on her dad’s CIBIL Score and Report to approve Priya’s laptop loan.

Priya, determined then and there, that she would build a good credit score. So, she asked her parents for an add-on credit card and started using it for small purchases – always making sure to pay the bill on time every month. By the time she graduated, Priya had established a positive credit history, and a steadily improving credit score. Her dad sponsored a CIBIL subscription for Priya and she was soon monitoring her credit profile every few months to track her report and use features such as the Score Simulator as a guide to teach herself how various credit actions impacted her score positively or negatively.

After graduation, Priya started working and with her credit worthiness at the back of her mind and smart saving habits, was soon able to save enough money to move out of her parents' house and rent her own apartment. When she went to look for a place to rent, a few landlords wanted to know her credit history (as an indication of a her ability to pay rent on time). Luckily, because she had been proactive in building her credit score and was well versed with her credit profile, Priya could explain that she already had her rent factored into her financial planning and assure them that’s she had been building her score since some years prior. She and her landlord came to a quick and mutually acceptable agreement on a great first apartment for her to rent.

A few years into her job, Priya decided that she wanted to buy a car. She had saved enough money for a down payment, but she still needed a loan to cover the rest of the cost. When she went to the bank to apply for a car loan, she was pleased to see that her CIBIL Score had improved even more. The bank approved her loan application quickly, and she was able to buy the perfect first car – a zippy hatchback, just right for her crowded commute.

As she progressed in her career, Priya started thinking about buying a house, both as a fixed asset, and a way for her parents to stay with her when they visited. She knew that buying a house was a big investment, and she wanted to make sure that she was financially ready. Her tax planner advised her to get a pre-approval for a mortgage. A pre-approval is a preliminary evaluation of a person's ability to get a loan, based on their credit score and financial information. The financial advisor explained that having a pre-approval would give Priya an advantage when she was ready to buy a house, as it would show that she was a serious buyer and that she had the financial means to get a loan. Following her planner's advice, Priya applied for a pre-approval. By then, her credit score was really quite good, and she was quickly pre-approved for a large loan amount. A few months later, she found the perfect house, and closed the deal.

So, as a woman coming up in the world today, having a good credit profile and score is important at every stage of your life - from getting a loan for a laptop or higher education, to renting an apartment, buying a car, and getting a mortgage. The sooner you understand that building a good credit score takes time and effort, but that it's worth it in the long run, the sooner you can start to treat your money and credit responsibly and optimally.