07-Dec-2018 written by : FSI-Team
Parents want their kids to grow up into a responsible individual. In this endeavor, they try to provide all kinds of education and guidance. Their constant direction leads one to lay the foundation of a successful career. Another thing that the parents want is that the child should be capable to manage his or her finances. And a considerable amount of effort goes into this important facet as well.
It is ironical that the parents miss out on an important aspect of financial management which is called credit. We live in a day and age where access to credit is as important as the regular earning. Inaccessible credit can lead to unfulfilled financial objectives and can even result in a stressful situation. Therefore, it becomes highly important to teach the teenagers on what they should avoid to have a healthy credit score.
Consistency in studies is the first step towards successful scoring. It cannot be a one time affair. One would only be mocking if claims to have scored good just by studying in the 11 th hour. Or he has been dead lucky. Akin to this, even the credit health that is depicted in credit scores needs regular focus and work. One would lose out on credit health in case the focus is lost.
Consistency in studies is the first step towards successful scoring. It cannot be a one time affair. One would only be mocking if claims to have scored good just by studying in the 11th hour. Or he has been dead lucky. Akin to this, even the credit health that is depicted in credit scores needs regular focus and work. One would lose out on credit health in case the focus is lost.
There are various examinations, test and checks to evaluate the understanding of the subjects. Similarly, one would need to keep a check on the movement of scores. Just like there can be various reasons for one to have less marks even if there has been adequate preparation, the credit scores can also experience a downward trend despite individual’s effort to keep them up at a good level. Owing to reasons like erroneous reporting of repayment, wrong update or even a loan not ever taken by the individual can lead to plummeting of the tally.
One should keep checking the bureau report. And now that the free CIBIL score just a click away, not checking it can only be termed as laziness.
The parent tries to educate the teenager to identify between right and wrong. The credit profile is also about understanding what is right for their financial health. The child would need to understand the importance that it plays in achievement of financial goals through out the life. Being credit savvy and taking the right kind of loans only when it is required, not utilizing the loan proceeds on extravagance or trying to keep the lure of a product that may not add much value to financial objectives being a reason for the loan application will help the child from being on the right side of bureau.
The child is taught to be responsible towards the time, money and other available resources. Similarly, he has to learn about the right usage of credit cards. The credit cards are one of the main reasons that lead people to a stressful situation. Not letting the card limit availability leading him to spend more than what he could pay up on the date of repayment is an important lesson to be learnt. Over spending on card can be devastating and can even lead to debt trap.
Drawing a budget and then sticking to it, unless there is an exigency, is another lesson to be learnt by the teenager. While the child can come back time and again with demand of some additional money to meet the expenses, he needs to be taught the ways to track expenses so that unnecessary expenses can be identified and managed within the allocated funds. May be allocation of specific money to a particular expense could be a good starting point.