India Doesn't Have a Credit Problem. It Has a Credit Awareness Problem.

India is quickly becoming one of the fast growing credit economies in the world. More people than before are using credit cards, taking personal loans, buying cars on credit and availing themselves of lending portals via just a few clicks on their smartphones. Credit has never been as accessible as it is now in the financial history of India.

But accessibility has outrun knowledge.

For many Indians, borrowing money has become easier than understanding how borrowing really works. Terms such as Credit Score, CIBIL Score, Credit Report, and Credit Monitoring have become familiar to more and more people in India; however, familiarity does not necessarily imply awareness. Borrowers are becoming aware of the importance of these terms only when their loan is postponed, a credit card application is declined or a surprising note is found in their credit report. Research on Indian borrowers demonstrates that awareness of credit scores is still lacking, especially among different age groups, levels of education and income.

The issue is thus not credit access.

It is understanding.

Credit Has Become Everyday Infrastructure

Credit is not restricted to important events anymore.

It plays an increasingly influential role in everything from purchasing a phone through EMI, acquiring higher education, buying a house, growing a business, and dealing with unforeseen expenses. With the rise of digital finance becoming an integral part of our lives, so does credit.

The issue is that people do not realize that credit is a relationship, not a product, and while they are interested in getting approval, they do not pay attention to their financial behavior affecting the approval.

That is why awareness is more valuable than knowledge.

Knowing Your Score Isn't the Same as Understanding It

Perhaps one of the biggest myths when it comes to personal finances is the belief that viewing a score and managing credit are synonymous.

The Credit Score is merely a representation through numbers.

There is a complete credit report that consists of your payment history, credit utilization, loan accounts, inquiries, and various other financial transactions behind the score.

Borrowers, not knowing all this, tend to work towards increasing their scores but remain oblivious to those financial practices that truly impact them. The credit reporting agencies and financial institutions keep highlighting these things time and again.

The Cost of Low Credit Awareness

Low credit awareness seldom leads to any instant issue. On the contrary, it leads to consequences that surface later on.

Overdue payment here. Several loan applications there. Unobserved reporting mistake. Credit utilization being high over many months.

Taken individually, each of these may look to be of little importance. Taken together, they determine one's credit worthiness. The awareness that one's credit history requires some attention becomes apparent only when it is time to apply for a home loan, business loan, or even credit card. This is the awareness that comes too late.

Credit Monitoring Is a Habit, Not an Event

Good financial behavior does not start when one needs money to borrow. Good financial behavior starts much earlier than that.

Credit Monitoring helps consumers to become more familiar with how their decisions impact their credit standing. This also allows consumers to recognize any mistakes in reporting, keep track of their payment history, and make good borrowing choices before applying for a loan. A review of one’s credit report or score is regarded as a soft inquiry and will not hurt one’s score.

Credit standings that are solid are never created by taking the easy way out.

Why Credit Awareness Is PrimeScore's Purpose

Empowerment does not start with lending. Empowerment starts with knowledge.

PrimeScore is convinced that no borrower should ever commit without being properly informed. Regardless whether he/she is a beginner at borrowing, an active comparison shopper, or a credit health enthusiast, a well-informed decision is what lies behind every successful choice.

This is because not only do enlightened borrowers score higher credit ratings. Enlightened borrowers score better finances in general.

Conclusion

The future of India's finance will not just depend on the amount of credit available to individuals. It will depend on the level of knowledge they have about credit. The more credit is integrated into our daily lives, the more important it becomes for us to know about it. At PrimeScore, our mission is clear – to enable more individuals to become knowledgeable about their credit awareness.