If you are wondering what all this is about and why should your wife need an independent score then read on to find out.
For Karva Chauth rather than choosing a fancy piece of jewellery or some trendy dress for your wife consider gifting her an independent Credit Score (you can still buy that gift you had in mind). In India only 22 per cent of adults have a credit rating, which is quite low. Women who have never taken up active employment are less likely to have a CIBIL rating.
Why have an independent credit score?
Mostly when we think of financial independence for women (especially the stay at home spouses) we think that a separate bank account is sufficient. Even a large number of working married women do not bother about having an independent CIBIL Score or give enough importance to maintaining it.
Most of the times since husband and wife have a joint account, or because the address proof might be in the husband's name the wife may not have a credit card in her name; she might have an add-on card.
An add-on card does not help in creating a credit history for the add-on user. Similarly the loans may be in the name of the husband; this is more likely in case the wife is not working or is self-employed. Out of convenience or ignorance married women or their spouses may not give attention enough attention to this aspect.
Just like one buys insurance to take care of their dependants, an independent credit score is a way to ensure your wife's financial independence with or without you. In an event like the death of the husband or separation (not to sound morbid but one needs to be prepared for the worst) the women find it difficult to get loans whether for a vehicle or to start their own business due to absence of a CIBIL rating.
Banks are comfortable lending to people who have some credit trail which displays their treatment of debt. A loan application is likely to be rejected if there is no CIBIL score or the person may be forced to borrow at a higher rate. A CIBIL score paves way to faster processing of a loan application; a high CIBIL score can give the borrower some leverage to negotiate better terms also.
If the wife has a CIBIL score then it can be useful in case the husband's application for a loan is rejected for some reason. The wife can become a primary applicant or maybe the co-applicant too. Often with a co-applicant the loan eligibility is higher.
We summarise the reasons why women, single or married, working or non-working, should have a CIBIL Score:
- CIBIL score aids in getting a loan, whether one is married or single
- It ensures financial independence; one can start a business or buy a car with the help of a loan
- In case the husband is unable to apply for a loan in his name for whatever reasons the wife can do so if she has a CIBIL score
- Wife can become a co-applicant if she has a CIBIL score; with a co-applicant the loan eligibility is higher
How to get a credit score?
For married women who do not have a separate source of income it may look like a challenging task. It is not! One could start with the simple process of applying for a credit card; not an add-on card but a separate card. Sometimes banks may not be willing to issue a card to a person who has no steady source of income. In such a scenario one could look at the option of taking a secured card.
A secured card is a credit card that is issued against collateral; generally it's a fixed deposit that is used as collateral. One could check with the bank they have an account, if the bank issues a credit card against a FD.
This card should be used regularly even if there is a single transaction and the dues should be paid on time. If one has a credit card it should not be surrendered in the event of a marriage or giving up active employment. It's a prudent choice to maintain the card and use it carefully continuously.
Similarly if your wife has a CIBIL Score in her name she should inform the credit rating about name change post marriage so that the credit history is carried forward.
Being aware of the importance of a CIBIL score is just the first step in the journey to credit score independence. Next is to start a credit trail. It is equally important to be aware of the right way to maintain it. All journeys begin with a single step; hopefully this Karva Chauth you take the first step.
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.
