What homemakers should know about CIBIL score?

There might be homemakers who have never taken up an active paid job and then there are those who give up careers for one of the myriad reasons. For those who have never taken up working, no credit cards or loans in your name means no CIBIL score.

Dec 21, 2015 05:12 IST CreditVidya Rajiv Raj |

Many homemakers may not have a credit history or a credit rating. There might be homemakers who have never taken up an active paid job and then there are those who give up careers for one of the myriad reasons. For those who have never taken up working, no credit cards or loans in your name means no CIBIL score. If you had a credit card during the student days then there might be some credit trail. Again even while working its likely though not necessary that you have a CIBIL score due to a credit card or loan in your name.

This discussion brings us to a relevant question which pops up: Is it important for home makers to have a CIBIL score? The answer is: Yes it certainly is!
 
Why is it important for homemakers to have a CIBIL score?
We live in unpredictable times, that is why we take insurance cover to protect ourselves from financial damage that may occur in the event of an untoward incident. It is mandatory for home makers today to be financially savvy and well informed.
 
In case of a separation or in the event of death of the primary bread winner various financial obligations and responsibilities fall on the shoulders of the stay at home spouse. In such a scenario if the person wants to avail a loan (after securing a stable source of income) it might be difficult for him/her to get one due to lack of a rating by CIBIL/Equifax/Experian.
 
Financial implications aside of an unfortunate event like separation or death even getting an auto loan can also prove to be a challenge; in case the children are grown up and you want an education loan for them, then also you can be left in a lurch since you have no credit history.
 
Even if all goes well and a home maker wants to start working a few years down the line whether take up a job or start her own business she might require a loan for her start up or buying a new vehicle. In such a scenario she would not be able to do so due to lack of a CIBIL score.
 
What Should Home Makers Do?
 
Below are a basic facts related to CIBIL score that every should be aware of
 
Do not Surrender an existing Credit Card: If you are working and already have a credit card and are planning on giving up active work life then do not stop using your existing card or surrender it. A credit card is the simplest way to start a credit history; if you have one do continue with it and consciously use it occasionally; though always remember to pay on time. This will ensure that you continue to have a credit trail and a CIBIL score.
 
Take a Card Before you Quit: When planning to quit working or take a break, ensure that you get a credit card in your name in case you already don’t have one. Getting a credit card is just the first step; no point in getting it if you think you will not use it or won’t pay on time. Delayed payments can do harm rather than any give you any benefits so when you are not drawing a regular income it’s a bigger challenge to use a credit card wisely and pay for it.
 
Maintain a Savings Account in your name: If you already have one then continue with it; if you don’t have one then open an account in your name. Account opening for home makers is not a tough thing to do and requires only basic documentation.
 
Get a Credit Card: In case you don’t have one then get a credit card with you as the primary holder. This will not be simple for a home maker as all banks may not issue credit cards without proof of running income. Some financial institutions however do offer that; check with the bank where you have a savings account. Banks often offer credit cards to the existing account holders subject to certain conditions. A few banks may offer credit cards against a fixed deposit too. Either ways get a credit card in your name and use it responsibly.
 
Other important things to know about CIBIL score:
  • If you have an add-on card you still will not have a credit history.
  • While you may not be paying for the credit card your actions do affect. Be in sync with your spouse about monthly spend your credit card. In case both of you charges heavily on the card without the other knowing it then it can lead to issues at the end of month related to payments which can affect the CIBIL score
  • In case you are responsible for depositing cheques or making online payments for loans and credit cards; remember delays hurt your credit rating.
  • Marriage does not affect credit history. Just inform the agency about the name change and the history is carried forward under the new name.
  • Whether you are a working spouse or stay at home spouse being aware is the first step to responsible credit behavior and ultimately to a healthy CIBIL/Equifax/Experian Score.
The author is Co-Founder & Director, CreditVidya.

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