Rekhil S

(Semester VI, BCOM LLB, School of Legal Studies, CUSAT)

Creditworthiness is a source of pride and self-esteem. But it isn’t only that; having a
good credit score is essential for obtaining credit when needed. A person’s credit score is directly tied to
his or her ability to obtain a credit instrument such as a credit card. In today's environment,
where finance is the primary driver of growth, availability of credit is pivotal. While all
stakeholders are working to make credit more accessible to the general population,
creditworthiness is a major determinant, thus it is critical to establish and maintain a decent
credit score.
The most interesting factor about credit scores is that they can only be created if one
begins to use credit, loans and advances. To suggest, the primary principle to establishing a
strong credit score is starting early, and it is best to begin using credit instruments before
reaching your late twenties. A good credit score is comparable to a strong CV or proposal,
and it becomes a sine quo non for getting the best rates on loans and advances. With the
growing demand for credit, financial organisations are now lending without regard for credit
scores, and customers can get a credit card if they maintain a certain Net Relationship Value
with the bank or by adhering to any other criteria. Slice, Simpl, LazyPay, and PostPe are
recent players that issue credit to consumers including students without considering their
credit score, instead focusing on their spending patterns and transaction history. If utilised
wisely, this can aid in the development of a solid credit score and make one eligible for
various financial instruments without difficulty.
The second crucial principle is right usage. To create and maintain a healthy credit
score, each credit instrument must be used properly and sensibly. It is important to note that
credit utilisation should be kept below 30% and that EMIs and payments should never be
skipped. Maintaining a healthy credit score can be as simple as diverting cash, UPI, net-
banking and debit card spends to credit cards, opting for higher spend limits, making
payments before statements are generated, and so on. In the CIBIL credit model, a good
credit score is between 700 and 900, and a score above 740 qualifies the consumer for
competitive rates. Credit age, number of credit accounts, credit mix are some other factors
that affect one’s credit score.
To add to, while a decent credit score is built and maintained through the early,
prudent and efficient use of credit and credit instruments, becoming creditworthy or rather a

secure guarantor needs you to meet several other criteria and requires you to become an
active economic participant. Having a decently valued and diversified investment portfolio,
stable income, insurance protection, good value of assets etc. are some of it. Here too, starting
early is the key as the benefits of compounding can be exploited maximum and here again it
is advisable to start investing before your late twenties.
While becoming creditworthy may seem like a monumental task, one can enjoy a
plethora of benefits and can save a lot as well once you’ve achieved it. With the
advancements in technology and digital banking it has become hassle free to make
investments, avail credit and monitor them. In India, several Neo-banking and investment
apps have integrated all banking and financial services into single platform and users are able
to use, manage and control everything at their fingertips.
Once an individual has built a good credit score and has become creditworthy, he/she
becomes eligible to several premium banking and finance features such as investment
guidance, priority service privileges, travel benefits, lifestyle benefits, healthcare benefits and
many other perks. Multiple bank accounts, premium debit and credit cards can provide
variety of advantages, like preferential service rates and exclusive discounts on ecommerce,
travel, and other online and offline sales points. A creditworthy individual is thus able to use
several services at zero or lower cost when compared to a normal individual. On average, a
wise user can save up to 100% on numerous categories and save at least 5% of his total
expenditure.
It is apparent that a creditworthy individual enjoys a multitude of benefits, the most of
which may even be shared with friends and family. In order to reap the full benefits of
creditworthiness, a person should strive to become creditworthy as early as attainable,
preferably before thirty. Making investments, purchasing insurance, and using credit cards
and other credit instruments as soon as practicable will lead the way and one will then be eligible for an infinite stream of rewards.