05-Nov-2015 written by : FSI-Team
Traditionally men are associated with financial management and all matters related to money. However in today’s world most women would be offended with this notion. In current times women are financially independent and make their own financial choices or are equal participants in all money related decisions in a family.
Thus it is imperative and logical that women are as worried about their credit report and realize the importance and utility of a healthy credit score. However there is another side to this coin as most men would like to think; women cause the credit scores to go down south. We will look at this aspect in some other posts; here we will see how women and credit scores relate positively or rather should ideally.
This question is especially relevant for homemakers or part time working women. Generally homemakers are dependent on the spouse’s income; thus all credit cards and loan are in the name of the husband. Actually it’s a catch 22 situation since women don’t need loans and cards in their name they don’t have a credit score or a credit trail and since they don’t have a credit score they are unable to get loans/credit card in their names easily.
For single working women in current times having a credit score comes naturally. Since they have a continuous stream of income and rarely can one survive without credit cards or an auto loan; having a credit history whether good or bad follows. Married working women may or may not have independent score depending on various factors. However it is better for both partners whether working or stay at home to have individual credit histories.
So why is it important for women to have an independent credit history? Not to sound morbid but in case of separation or the spouse passing away it will be very difficult to apply for a credit card or a loan in your own name if you already do not have a credit history. When one does it at the start of the career you get special student cards or the organization that you work for helps you in getting a card/loan through corporate tie-ups. These facilities are not available in the later stages. Also if for a small infraction credit history of the primary bread winner is spoilt then a loan or a credit card can be applied in the spouse’s name.
Often having a loan in the wife’s name or a joint home loan may have some additional advantages. Sometimes there are schemes where women might get preferential in allotment of house etc. In such a scenario an independent credit score will be beneficial. Some organizations may require a credit score as a part of the background before you are offered a job. Though not so common in India currently this trend is catching up to become a part of regular background check before hiring a prospective employee.
In case you are woman who does not have a credit score or a credit history then it is important that you start working on it right away. You can start small! Being aware is the first step. Having an independent credit score is part of the bigger picture of being financially educated and informed.
One should start by getting a credit card in one’s name. Start with one card as both too much credit and no credit are bad for the credit health. Pay all bills on time and do not default on payments. Delay in paying bill due to oversight impacts credit score negatively. Having a credit card in your name should not make you go overboard with the spending; payment still has to be made on the due date.
In case you are working and plan to give up your job due to some reason it’s a good idea to keep your individual name account and also the credit card (if you have one) in your name. Older cards and account reflect your credit history better especially if there are no defaults.
So be financially savvy and whether you are a man or woman realize the importance of a health credit score.