If you’re a homemaker and spend a lot of time on domestic improvement and maintenance, chances are you haven’t paid too close attention to your CIBIL credit rating. It’s true that you wouldn’t really have had to, given that the breadwinner of the family handles most financial matters. But what if one day the breadwinner is rendered incapable of providing for you and your family, or if the worst comes to pass and she/he is no longer of this world?
Granted, your first concerns won’t be purely financial, but there will come a time when you may feel the pinch of financial insecurity and instability. To combat this, it’s strongly recommended that even homemakers keep an eye on their credit rating from credit information bureaus like CIBIL/Equifax/Experian.
Why is a credit score important?
Well, a good credit score is what all lenders look for in applicants whom they consider lending to. A sub-standard or non-existent score will mean that you can’t get a home loan to renovate your home, and you can’t get an education loan to educate your children. You won’t even be eligible for a credit card to manage household expenses. Although you will definitely need a job or some source of income to pay off EMIs and bills, you may even need a good credit rating to land yourself that job – as employers are looking at credit scores to determine stability and reliability.
How can you, as a homemaker, take steps to improve your credit score?
The simplest way to get started in the process of establishing a decent credit score is to get a credit card, and use it judiciously. Even if you have the cash for a small purchase, use your card and pay it off as soon as you can, before the due date. Never, ever, ever overshoot the due date on a credit card payment, as this will damage your credit rating in a terrible way.
Regular, stable and responsible use of a credit card is a huge indicator of stability and capable financial management, resulting in a constantly growing credit score.
- Maintaining a savings account in your name, and having an amount of money deposited in it every so often is a good way to survive the financial crunch. When the breadwinner is no longer in the picture, all those deposits will work as a financial cushion to break your fall. Savings accounts earn good amounts of interest and are instantly liquefiable. Also, as an added bonus, a savings bank account in a particular bank will increase the chances of you getting a credit card from that bank, as they know all your details and have details about your financial status. The same credit card can then be used to improve your credit score.
- Stand as co-applicant or guarantor on the breadwinner’s loans and make sure he/she pays off EMIs as and when they become due, and make sure your better half doesn’t default on the loan in any way. Standing as a guarantor makes you just as responsible for honouring the loan, and a successful repayment of the loan will improve your CIBIL score by a sizeable amount.
- Co-applying for a loan with your spouse is a good way to make sure both credit scores go up, if you pay your loan back diligently and don’t default in any way. It is also a good way to secure a far greater loan amount than you would have received with a regular single-applicant loan, and on better terms, as the lender will be far more confident in recovering the debt with two responsible adults working towards paying it off.
Don’t underestimate the value of a good CIBIL score as it’s a direct indication of your creditworthiness and ability to manage finances and debt. Taking a loan to secure your future in the future may depend entirely on this, and no matter what, make sure that the EMIs on any loan you take (with or without a primary family earner) can be paid off on the income you currently generate.
A regular income will enable you to manage a household as you once had, but when huge expenditures like college tuition for your children or emergency medical expenses befall you, a loan may be your only option for large sums of money, quick. Ensure your CIBIL score is up to the mark to ensure that you’ll always be eligible for credit – and always have something to fall back on.