Financial freedom—it’s a goal most of us aim for. But how do you get there? For Millennials and Gen Z who have to deal with student loans, rent, while trying to save something for the future, achieving the financial freedom may seem unattainable. However, there is one powerful aid that will significantly contribute to your effort – your CIBIL score.
In this blog, we’ll explore how Millennials and Gen Z can effectively use their CIBIL score to secure their financial future.
What is a CIBIL Score?
In simple terms, Your CIBIL score is a three-digit number, ranging between 300 and 900 that indicates your creditworthiness. Financial institutions use this score to assess how likely you are, to repay borrowed money. The closer this score is to 900, the more trustworthy you seem to potential lenders. Millennials and Gen Z have to get into the habit of checking their CIBIL score often to keep a tab on their financial well-being.
Why CIBIL Score Matters for Millennials and Gen Z
Millennials and Gen Z are stepping into adulthood, looking to buy homes, cars or even start businesses. But, a very important step to realizing these dreams is getting access to affordable credit. A good CIBIL score helps in doing that, as it plays an important role in:
- Favorable Interest Rates: Financial institutions lend money to those individuals only whom they find creditworthy.
- Higher Loan Amounts: A good score helps borrowers to get access to higher credit limits that in turn provide them the flexibility of making big purchases.
- Quick Loan Approvals: Banks and other traditional lenders approve loans more quickly for borrowers with a good credit history.
How Gen Z and Millennials Can Build and Maintain a Higher CIBIL Score
Achieving financial freedom requires building a robust CIBIL score. Here are some actionable steps for Millennials and Gen Z:
- Pay Your EMIs and Credit Card Bills on Time: Timely repayment of loans and credit card dues is essential to keep up the high CIBIL score. Even one late payment can bring down your score, so remember to set reminders or opt for automatic payments.
- Keep your Credit Card utilization low: Refrain from exhausting your credit limit on your cards. It is a signal that you are going through financial crunch to the lenders, and this can impact your CIBIL score.
- Avoid Applying for Too Many Loans: Applying for too many loans or credit cards within a short span of time can lead to lowering of your CIBIL score as every loan application translates into a “hard enquiry” on your credit report, bringing down your score.
- CIBIL Score Regularly: It is crucial to keep a regular check on your CIBIL score and credit report in order to identify any discrepancies or inaccuracies. Ruloans provides free CIBIL score check which will help you to keep a track of your credit health without actually impacting your score.
Smart Financial Moves you can Make with good CIBIL Score
Once you’ve built a good CIBIL score, Millennials and Gen Z can use their CIBIL score to gain financial freedom. Here are some smart moves:
- Consolidate High-Interest Debt: If you have multiple loans or credit card balances with sky-high interest, then it may make sense to consolidate them into one loan with a lower interest rate. This is only possible if you have a good CIBIL score though and will help you save money and become debt-free faster.
- Invest in Real Estate: Building a good CIBIL score helps you avail home loans at competitive rates. And property is one of the best sources to accumulate wealth over time.
- Start a Business: A high CIBIL score can help you secure funding to kickstart your business if you dream of being an entrepreneur. Lower-interest loans mean you can focus more on growing your business and less on paying off debt.
Why Monitoring Your CIBIL Score is Crucial for Financial Growth
Keeping an eye on your CIBIL score is not something you do once and forget. It’s a habit that will give you returns, save money, and help you understand where you stand. If your score has fallen, you must recalibrate your financial journey and change some of your habits.
Many platforms, like Ruloans, offer CIBIL score check online. You can quickly check your CIBIL score without affecting your credit rating, allowing you to stay informed about your financial health. Additionally, you can calculate CIBIL score based on your credit behavior and payment history.
Common Mistakes to Avoid That Can Hurt Your CIBIL Score
Even with careful financial planning, inevitable mistakes can cause your CIBIL score to dip. Here’s what Millennials and Gen Z should avoid:
- Late Payments: Your score takes a hit when you’re 30 days or more past due. Avoid missing payments by setting up reminders or automatic payments.
- Maxing Out Credit Cards: Lenders get worried if they see you’re using too much of the credit available to you. Even if you pay your bill in full every month, aim to use no more than 30% of the limit on each card.
- Ignoring Credit Reports: Your credit report might have errors that can pull down your CIBIL score. You should check your CIBIL score report at least once a year to spot mistakes.
Final Words!
Millennials and Gen Z have a unique opportunity to build a financially secure future, and the CIBIL score is a critical tool in achieving that goal. By understanding how your score works and making strategic financial decisions, you can take control of your financial health and move one step closer to financial freedom.
If you’re ready to start your journey, Ruloans is here to help. With our partnerships with 275+ top-tier banks, NBFCs, and financial institutions, we can help you borrow smartly and explore a wide range of financial products, such as personal loans, home loans, car loans, and much more. Plus, with Ruloans, you can check credit score free and get instant insights into your financial health.
Don’t wait—take the first step toward financial freedom today with Ruloans!
