What the hell is Credit anyway?

A lot of young people end up feeling like fools later in life when they realise they have an insufficient Credit Score because they failed to repay the credit they took in past. Then there are other kinds of fools, the ones that are afraid of Credit because they don’t know much about it. They can’t see how it’s important to everybody who hopes to make it in today’s world.

In this post, we attempt to educate young people like you about a very important lesson. Maintaining a good credit score ensures that you never face any issues later in life when you go for any kind of Credit – Education loan, Vehicle loan, Home loan, Marriage loan, etc. Read on about Credit Score and how maintaining it via timely repayments is very important for your successful future.

What is a Credit Score?
A credit score is a numerical Score that summarises your credit history and credit risk for lenders. If you are applying for any kind of a loan, be it an education loan, credit card or even a home loan, the bank or lender will check your credit report and credit score to understand your risk profile (i.e. how likely you are to pay back the loan) and decide whether they want to issue the loan to you.

Who has got a Credit Score?
If you have ever taken a loan (personal, auto, education, home etc.), or if you have a credit card, or if you have bought products on EMI, you should have a credit history and a credit score.

What happens if I don’t pay my dues on time?
All your payment transactions and history are being reported to the credit bureau by the loan provider (example SlicePay). Therefore, if you are not making payments on time, it will reflect in your credit report and negatively impact your CIBIL credit score. If you default on any of your loans, it may reduce the possibility of you getting a loan for many more milestones in the future – education loan, home loan, auto loan, marriage loan, etc. So please ensure that you pay all your bills on time. If you are not able to meet your EMI obligations, please work with the lender to make some alternative arrangements, if possible.

Can my credit report / score impact a Job interview outcome too?
The answer is ‘Yes’. Several companies from Finance, IT and other sectors have started to check the candidate’s credit score and credit report as part of the background check process. This phenomenon is more common at senior level hiring. Quite a few companies (mostly multinationals) will run a worldwide credit check (e.g. USA, Canada’s FICO) on you. If your credit report or credit score show major issues in terms of your debt repayment history, you may not be selected for the job you have applied for. If the employer is not able to access your report directly, they will ask you to submit this report along with rest of the documents required by the company.

Please ensure that you maintain a good credit score by taking credit only when you need it and always repaying all your dues on time. Also, share this information with your friends and loved ones and help them make good decisions in life.

2 thoughts on “What the hell is Credit anyway?”

  1. Wow,Fantastic article,it’s so helpful to me,and your blog is very good, I’ve learned a lot from your blog here,Keep on going,my friend,I will keep an eye on it,One more thing,thanks for your post!

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