In today’s environment, access to credit is crucial if you want to build a house, start a business, or manage your daily costs. Most of them go to banks or financial organizations for assistance, whether through credit cards or personal loans.
However, these lenders do not give money to anybody who approaches them with a request. Lenders want to know your financial security.
Here credit score plays an important role; it shows your financial background status and serves as a financial CV.
Most engineering students are not prepared for financial management after graduation. At the same time, most engineering students lack financial knowledge.
This blog explains the importance of credit scores and helps college students to have a stable and pleasant old age.
What is a Credit Score?
A credit score is defined as the creditworthiness of a person to represent their repayment of debt. A credit score is a three-digit numeric representation of a person’s creditworthiness. It varies from 300 to 900 and maintains a higher score suggesting lower credit risk
| Category | Credit Score |
|---|---|
| Poor | 300-500 |
| Fair | 500-650 |
| Good | 650-750 |
| Excellent | 750+ |
What does your credit score help you to know?
A credit score is the value of your credit health. Look at what credit scores can help you know
Current credential status:
When you check your credit score and maintain it, it represents the summary of present and past transactions. This shows the credential status and lets you know where you stand and where to focus on.
Get the best offers and credit cards:
Maintaining a good credit score makes you eligible to get the best offers on loans and credit cards. Credit scores of more than 750, can give you the best deals on credit products.
If you want to read more about credit score and financial credit report, Please click here…
Importance of credit score
Lower rate of interest:
Having a higher credit score is beneficial because banks or any financial organization offer loans with a low rate of interest like personal loans. Considering your repayment history, you can get a discount on processing fees and might be eligible for a higher loan amount
Credit card limits:
Maintaining excellent credit scores helps in getting higher loan amounts, and banks will offer credit cards with higher limits. At the same time, a lower credit score will result in a lower credit limit.
Quick loan approval:
Loan approval is quick if the borrower has a high credit score. Getting quick approval is one of the biggest benefits of a high credit score.
For the future :
It is necessary to maintain a good credit score even if there is no need to take loans. A good credit score will help in applying for a home loan, personal loan, or any kind of loan in the future.
Financial Challenges Faced by College Students
Limited credit history:
Usually engineering students may have limited or no credit history; which it makes difficult to access loans or credit. This can affect their ability to rent an apartment or secure a car loan.
Unexpected expenses:
There are unexpected expenses, such as medical emergencies, car repair, or others that make them difficult to handle without Emergency cash or financial safety nets.
Student loan:
Many students rely on student loans for their education. It becomes difficult and puts them in a financial burden after graduation. This affects the student’s well-being and ability to save for financial goals.
Lack of financial knowledge:
Most engineering students have a lack of financial knowledge. This can lead to poor financial decisions such as overspending, incurring unneeded debt, and failing to save for emergency or long-term financial goals.
Conclusion
It is important to note that the importance of credit scores plays a major role in difficult situations, especially for engineering students who undergo financial problems after graduation. Building credit scores is an option for recovering from a financial problem, when there is no one to help. It also helps to improve the chances of being eligible and will also help you get the best terms possible, such as low interest rates and greater loan limits.
FAQ:
Do I need to have good credit when applying for an education loan?
Yes, you would need a strong credit score to apply for an education loan in India.
What is a good credit score?
Credit score ranging from 700 to 790 is considered an excellent score.
Is 500 a bad credit score?
Having a credit score of 700 – 790 is excellent, 500 is considered an average score.
Should i get a credit card if im a student?
It depends on student financial demands, credit card helps you manage your finances better.
Do I have credit score if I have a Debit card?
No, only credit cards help you build a credit score. You cannot build a credit score by using a debit card.
