Today, the biggest segment of borrowers constitutes millennials. There’s a paradigm shift from the ‘save now’ attitude of baby boomers and Gen X categories to the ‘own first, pay afterward’ mindset of Gen Y and Gen Z. When you add digitalisation to the equation, you get further encouragement for credit demand. With so many apps and online portals that make loans available, the choice is abundant whether you want a pint-size loan or a barrel full of funds. Besides this, the shopping trend is ever-permanent, and millennials see power in the form of credit cards and tools that give them free reign over e-commerce platforms. Here’s where a CIBIL score comes into the picture.
Explaining CIBIL Score
For all practical purposes, a CIBIL score is any number in the range of 300 to 900, giving you (and lenders) information about your creditworthiness. CIBIL is a credit bureau, formed in India, under TransUnion CIBIL, a recognised credit tabulation global agency. What CIBIL does is keeps a watch on all your financial data, past and present. It tracks any past/present loans, mortgages, credit card bills, defaults on payments, repayment schedules, etc. Reviewing your credit balance helps CIBIL to calculate a score that indicates current financial standing. Apart from a number, CIBIL also generates a report. Within the CIBIL score range of 300 – 900, a good score is any value above 750. Anything above 700 is considered acceptable.
Why CIBIL Score Matters
Research conducted byTransUnion CIBIL, in 2018, showed a growing level of credit-consciousness within the population of Indian millennials. These Indians were precise in self-monitoring practices, keeping an eye on what they spent on, how much they spent, and how it affected their CIBIL scores. Notably, this self-evaluation grew by 58% during the span 2016 – 2018. Furthermore, the report claimed that millennials were among the most conscious consumer categories regarding their credit. These individuals regularly tracked their CIBIL score ratings and were careful enough to maintain scores at an average of 740. More conclusive data from the report suggested that millennials checked on their CIBIL report at least six times per year. A large number of these millennials, 64%, were in the habit of applying for credit within three months of their score checks.
Analysts state that this trend will continue among millennials as they want to be future-ready to gain loan approvals for big-ticket items like cars and homes. A satisfactory to high CIBIL score can be advantageous in such circumstances. Moreover, millennials have realized the importance of developing a quality credit stamp, with the maintenance of scores in the CIBIL score range from 700 – 900, as they are not only assured of loan approvals in the future, but attractive interest rates offered on those loans. This compels them to pay cognizance to their CIBIL report, immediately rectifying scores if they fall below standards.
Always on Point
Millennials seem to be on top of their game as they constantly want to improve their CIBIL scores. The TransUnion study also showed this, and 51% of millennials who had low scores made successful attempts at improving scores by an increase of 65 points or more. Learn more about CIBIL scores and how to maintain and improve these at Finserv MARKETS.