What are Credit Scores and why do they matter?
Factors, impact, and actionable steps
"Financial independence is the new feminism."
- Unknown
W: Welcome Story
Meet Meera, an Indian mom with a humble income in the bustling streets of Mumbai.
One day, her son, Raj, received admission to a prestigious university abroad. Raj had a year to join the university. The challenge was the hefty tuition fees, which seemed impossible to him.
Knowing this, Meera quietly began her financial transformation. She meticulously managed her finances, paid bills on time, and reduced credit card debt. She was on a mission to improve her credit score, but nobody knew why.
As the days passed, Meera's credit score skyrocketed. When the time came to secure Raj's education funds, she revealed her secret weapon—a stellar credit score. With it, Meera secured a low-interest education loan for Raj, ensuring a bright future without a financial burden.
Meera’s smart financial planning not only enabled her son’s education but also unlocked better loan terms for the family’s dream home.
E: Education
In the previous issue, we discussed if you need to own a credit card or not and how you decide.
In today’s issue, we will move a step ahead and learn about using credit cards effectively by building a good credit score.
First things first, What is a Credit Score?
A credit score is a numerical representation of your creditworthiness.
It indicates how likely you are to repay borrowed money. A higher score, closer to 900, reflects better creditworthiness, making it easier to access financial opportunities.
To understand how to build a good Credit Score like Meera's, you should understand the Factors affecting your Credit Scores
Payment History: Timely repayment of loans and credit card bills is crucial. The more you delay your payments, the lower the score gets. Vice versa.
Credit Utilization Ratio: This is the percentage of your credit limit that you use. Keeping it low, ideally below 30%, can boost your score.
This means if you have INR 100,000 in available credit, your outstanding balances should not exceed INR 30,000.Credit History: A longer history of responsible credit use can improve your score.
Types of Credit Accounts: Having a mix of credit types, like credit cards and loans, can positively impact your score.
Recent Credit Inquiries: Applying for new credit frequently can lower your score.
How can a good Credit Score Impact your Finances?
Now we are talking!
A good credit score can unlock better financial options and save you money in the following ways:
Loan Eligibility: Lenders assess your score when deciding to approve or deny your loan application. Better score implies a higher chance of approval.
Interest Rates: A higher score often leads to lower interest rates, reducing your borrowing costs. We’d all love it, don’t we?
Rental Applications: Landlords may check your credit score when considering your rental application.
Meera has done her part in managing her credit cards smartly and leveraging her credit score to fund her son’s academics.
Now it’s your turn to maximize the benefits of credit scores.
A: Actionable Steps
To improve your credit score:
Pay bills on time.
Keep credit card balances low.
Maintain a mix of credit types.
Avoid opening too many new credit accounts.
Set up payment reminders or automatic payments to avoid late payments.
Your Path to Financial Independence:
If you find this newsletter insightful, we have a course 10x valuable for you.
Moolah’s Finance Essentials Course:
Right from understanding the terms to planning your finances to managing money independently, we guide you through everything.
A few highlights (you’ll ace these after the course):
Clear understanding of key financial terms
Budgeting
Managing Credit Cards efficiently
Financial Planning and building investment portfolios
Understanding loans
That’s not all.
You’ll get cheatsheets, masterclasses, and live mentoring with the Founder and Financial Coach, Meeta Gupta.
IMPORTANT:
We have made changes to our course structure
Earlier, we had only one Premium course structure.
Now, we have diversified our knowledge into four packages: Silver, Gold, Platinum, and Platinum Lite.
We did this to provide you with convenient, affordable, and optimizable options based on your content consumption preferences.
L: Learning
If credit cards fascinate you, we have got a blog from Investopedia that explains how to improve your credit score fast.
It’s a perfect recommendation if you want to go down the rabbit hole.
Read it here.
T: Thought Leadership
"Your credit score is your financial reputation,
and it's important to manage it responsibly."
- Suze Orman
Your credit score reflects how responsibly you've managed credit and debt. Maintaining a good score isn't just a number on paper; it's a key that can unlock favorable interest rates and loan terms.
A strong credit score can save you money over time and provide access to better financial opportunities.
So ladies, just as you'd protect and nurture your reputation, it's crucial to manage your credit wisely to secure a sound financial future.
H: Happenings
We got a couple of events lined up for you in the next two days.
Monthly Q&A session:
Meeta answers all your finance questions on the third Friday of every month. Use this link to register for the session and get your queries cleared!Venue: Zoom
Date: Friday 15th September 2023, 6:30-7:30 pm IST
PS: This is Today.Dress for your Body:
Image consultant, Neha Mathur will give a webinar on Body Image and share Styling Tips. Register here for the event.Venue: Zoom
Date: Sunday 17th September 2023, 6:30-7:30 pm IST
That’s all we have in today’s issue. We’ll see you again in fourteen days.
PS:
If you want to ask us questions or if we can help you in any way, you can ping us at wealth@moolahforwomen.com. We will respond within 24 hours.