Outside of the number: What does your credit rating really say about you?

Credit point: If you want to borrow money from a lender, one of the first things the lender would do to check your creditworthiness. For the uninitiated, a creditworthiness is a three-digit number that summarizes the repayment history, credit mix, credit age, outstanding balances and recent inquiries. Despite its importance, more than 400 million adults do not have credit history at all. It is almost one in two adults without a financial identity, according to a Transunion Cibil 2022 study. Zet recently released a report, ‘State of Credit Score Awareness in India’, saying that the rejection of loans is often quiet and confusion around credit values ​​means that users are denied without knowing why. Rejected for a loan when asked if they were ever rejected for a loan or credit card because of their creditworthiness, 30 percent of respondents said ‘yes’ and 70 percent said ‘no’ – the report said. “If people don’t know why they were denied, they won’t know how to solve it. Rejection without education for the first time turns users away from formal credit and pushes them to unregulated options, which can have serious consequences,” the report states. “About 1.6 percent more than the best available rates. On paper, the difference looked small. But for a £ 35 lakh house loan over 20 years, the 1.6 percent more than £ 8.5 lakh added. It looked like a minor compromise at the beginning. not. While most people overlooked other key, such as maintaining a healthy credit mixture and keeping credit utilization low. Accounts positively contribute to the credit age, a key factor in creditworthiness calculation, the report says. as it is a set of risks such as high interest rates, hidden costs, etc.