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Why Your Credit Report Plays an Important Role in all Phases of Life

Credit-smart people always put emphasis on keeping their credit score high. However, the truth is that your credit report is way more important than you think. This is because you don’t need it just once or twice in your life but in rather every phase of your life. Let’s dig deeper into how this works.

Finishing School, Preparing for College

Most students don’t have to worry about getting a credit card or checking their free CIBIL score when they are still in school. This is because all their expenses are paid by their parents including school fees, tutor fees, books, recreation, etc. However, when you finish school and start preparing for college, you have to learn to take some responsibility for your actions.

College education can be quite expensive if you want to get into an engineering or medical institute.  So, you may need to get a student loan which is where your credit score comes into the picture. If it’s good, then you can get a loan easily, and if not, you may lose a chance to get into your favourite college even if you have secured a seat.

Searching for a Job

After you have graduated, you want to look for a high-paying job. However, you will be surprised to know that more and more companies have started checking the credit report of the job applications for screening purposes. This trend can be easily observed in many Indian banks including SBI which specifically said that “Candidates with record of default in repayment of loans/credit card dues and/or against whose name adverse report of CIBIL or other external agencies are available are not eligible to apply for the post,” in an advertisement for various jobs some time ago.

So, in other words, your options for jobs can also be limited if your credit score isn’t up to the mark or if you have defaulted on a loan in the past.

Buying a Car or Home

When you start earning money, you want to improve the quality of life. So, you want a good car and also a house of your own. Both of these are smart investments as one makes commuting to work easier, and the other saves the money that you would otherwise spend on rent. However, it’s not usually possible to pay the price of either of these upfront and you have to check your home loan or car loan eligibility.

Again, if your credit report isn’t up to the mark, you can’t get a car loan or home loan easily. Even if you do manage to get one, it’s likely to have a high interest rate which will only make repayment harder for you as there are many other expenses to take care of when it’s the beginning of your career. In other words, merely fulfilling car loan eligibility isn’t enough. You also need a good deal from your bank, for which you need a good credit report.

Getting Married, Raising Children

In India, marriages aren’t just “events”, they are festivals of their own which require huge investments. This is the reason why so many young professionals take personal loans for their marriages.

After you have married and become a parent, more responsibilities come knocking at your door. For instance, when it’s time to send your child to a good college, and they need an education loan, then their credit report might be checked. However, you may need to become a loan guarantor which is why your credit report will be checked as well.  So, whether they are able to study in a good college or not depends on how high your credit score is.

The Bottom Line

If this blog has served its purpose, then you know how important your credit report is no matter what phase of life you are in. From the time you get into a college to the time you have to send your own kids to their college, you have to show your credit report time and again. Thus, it’s important that you take your creditworthiness seriously. If you haven’t checked your free CIBIL score yet, now is as good a time as any.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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