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Your Credit Score Is Related To Your Happiness

07-Feb-2017 written by : FSI-Team

"What is it that one thing which makes you really happy?" asked the interviewer in his soft tone, gently smiling at Gaurav. "Money", silently thought Gaurav. Ofcourse he wouldn’t say it loudly. He did not want to be stared at or be judged as a greedy selfish person, which he was not. But it was the truth. Unspoken though, but many people in the crowd agreed with him.

Gaurav lived in a rented apartment and it had been 10 years since he moved in. His wife Deepa insisted that they must buy a decent house, at a decent location, with decent amenities. The only problem was such a "decent" house did not come at "decent" prices in Mumbai. Tired of the constant bickering at home, Gaurav escaped to attend a spiritual guru's discourse. But all he could wonder was from where to get the money to buy a house. Especially, at a time when he was struggling to improve his CIBIL score.

Everyone will either see a reflection of them in Gaurav or know someone like him. Money brings happiness doesn't mean luxury brings happiness. You see, money is required to fulfil every need of life. Basic necessities such as hygienic food, safe shelter, proper clothing, etc. can be bought with money only.

In this era, where options are much more than the money in one's pocket, credit seems to be the final resolution. You can’t buy that latest gadget from your own salary so use your credit card. You can't afford to send your child to that pricey college, take a student loan. Everyone you know has been to Singapore for a holiday but your pocket doesn’t allow it then take a personal loan and go. So, essentially, whatever your need be you need funds to satisfy it.

And when you don't have money, you turn to borrow it. But what if you can't borrow it? Naturally, it will sadden you.

The role of a Credit Score

We have by now established how credit is imperative to one's contentment. The single most important factor that will make it easier for you to access credit is your credit score. Credit score check is indispensible. Lenders will check the credit background of every applicant to ascertain one's creditworthiness. Based on their examination, they decide on whether the person should be given a loan or not and subsequently draft terms of loan.

Typically, a credit score ranges between 350 and 900. A score bending towards the lower range of values is considered as a poor score while a score tending towards 900 is a good score. Lenders, but ofcourse, want to deal with applicants who have a good score, preferably above 750.

Unfortunately for our friend Gaurav, his score was 524. Of late, he had been working to improve his credit score but he realised his faults too late. The damage was already done. It would now take quite some time to rebuild his credit score. Meanwhile, he could only hope Deepa would be more patient.

Gaurav often wished he knew how important his score would be in future. He would never have been so careless with his debts in the past. They had earmarked a property to buy. If only they could arrange for funds right now that would make them so happy. But one thing coming in their way was a poor score.

Some of the changes that Gaurav made to improve his score were:

  1. He was now conscious of his payments and timelines. He never exceeded his payment deadline, so to speak.
  2. He made sure he didn't apply for fresh credit until his score was good enough to be eligible for a home loan.
  3. He limited his use of credit cards to not more than 40% of their available limit.
  4. He contacted his previous lenders and paid off in instalments those accounts that he had previously ignored.
  5. He did not cancel any of his old credit cards; rather he hid them in a safe place. He knew cancelling cards would affect his available limit and therefore his score.
  6. He regularly monitored his credit report and made sure it reflected accurate information.

Most importantly, he was patient. After a couple of years, his score had certainly gained several points and he was able to get a home loan. Gaurav & Deepa were finally happy as they planned to move into their own house very soon.

Money indeed brings happiness, only our definition of "how much money" varies.


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