If you have come across the term Credit Score, but don’t understand it, don’t worry. You are not the only one. Most of the information available is extremely technical and downright scary! Which is why we have simplified it for you. The secret is to ask the right questions. We’ll ask those questions and answer them. Aren’t we the nicest? After you are through with this article, you’ll be a pro explaining the concept to your friends.
Check out our super simple guide to understanding the basics of a Credit Score!
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What is a Credit Score?
In the simplest terms, a credit score reflects how likely you are to payback any form of credit. In technical terms, it is calculated considering several factors, especially your history of repayment. A Credit Score lies between 300 and 900. A Credit Score is “healthy” or “good” if it is above 750. Although the 650-750 range is not necessarily considered “bad”, it disqualifies you from most borrowing methods.
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Who Needs to Maintain a Good Credit Score?
Just about everybody! If you ever need credit, your score is checked upon by banks and NBFCs alike. Instead of telling you what a good credit score can get you, let us tell you what a bad Credit Score can take away from you. If you score below 650, it is considered a bad one. People with bad credit scores, don’t get loans approved. Even if you get one, your interest rates will be high to cover the risk.
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Why do I Need to Know all this as a Student?
Most often we are lead to believe students don’t have to worry about their Credit Scores until they enter the real world. This is far from true. In fact, the earlier you understand this the better. Once you enter the workforce or in the market for accommodation and need to borrow money, you’ve already spent it in a way that may be perceived as ‘irresponsible’. This can delay your 5-year goals if you’re a planner and your spontaneous decisions if you’re not.
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How Does it Affect Me?
Besides the issues mentioned above regarding Bad Credit Scores, your future employers and landlords too can use this to determine if you’ll be able to perform a job or make your rent each month. Absolute worst-case scenario: you have the next million dollar idea, but no one wants to lend you a helping hand to explore it.
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When Can I Build a Good Credit Score?
You don’t have to wait until Monday morning to begin, you can do it right now! Pay your bills on time whether it’s for your bank account interest or your credit cards. It may seem like a small thing to do, but it can take you a long way.
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Where do I Start?
We swear this isn’t a shameless plug for our product, but as a college student in India, StuCred is one of the best options to help build your Credit Score. StuCred takes its role in the student community extremely seriously. We offer a flexible 30-day credit (which can be extended once within that period). As you repay, we increase your credit limit but allow you to decide the amount you need. Most importantly, we don’t charge interest on our loans. They say college is the best time to learn. Why not learn how to make sound financial decisions with StuCred today?
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