With financial independence becoming a reality for more Indian women, their participation in the borrowing market is on the rise. According to a report by TransUnion CIBIL, women borrowers in India grew to 63 million in 2022, accounting for 28 per cent of total borrowers. Interestingly, women are also proving to be more creditworthy than men—53 per cent of women borrowers have prime credit scores (731-790+), compared to just 47 per cent of men. However, despite this stellar repayment track record, women still make up only 29 per cent of the total borrowers.
Chartered accountant Abhay Asknani notes, ’This disparity may stem from outdated practices where financial institutions demand male co-applicants or collateral for loans, even though women have proven to be reliable borrowers.’ Addressing this gap is crucial for improving credit access for women and empowering them financially.
Why Your Credit Score Matters
Your credit score is more than just a number—it reflects your financial health and determines how easily you can secure loans or credit. A strong credit score helps you get loans at lower interest rates, access larger amounts, and even enjoy better repayment terms.
However, a poor credit score isn’t the end of the road. By following these steps, you can improve your credit score and enhance your financial credibility.
Bridging The Credit Gap For Women Borrowers
Women borrowers have demonstrated financial reliability, as shown by their lower delinquency rates (5.2 per cent compared to men’s 6.9 per cent). Yet, they still face barriers like co-applicant requirements and limited lending options. Drawing inspiration from the microfinance sector, which thrives on female borrowers, financial institutions can confidently increase lending to women.
’Loan portfolios with a higher percentage of women borrowers tend to perform better,’ says Abhay. Encouraging more women to take control of their financial journeys not only boosts their credit scores but also contributes to a more inclusive and robust economy.
By maintaining a healthy credit score, women can unlock better financial opportunities, breaking free from outdated stereotypes and setting an example for future generations.
Steps To Improve Your Credit Score
1. Pay Your Bills On Time
Timely bill payments are non-negotiable. Your payment history carries the highest weightage (35 per cent) in your credit score calculation. Set reminders or automate payments to ensure you never miss due dates.
2. Keep Credit Utilisation Low
Aim to use less than 30 per cent of your total credit limit. High credit utilisation can indicate financial strain, which may negatively affect your score.
3. Check Your Credit Report Regularly
Errors in your credit report can drag down your score. Review your report periodically, and if you spot any discrepancies, report them to your lender immediately.
4. Diversify Your Credit Mix
A mix of credit types, such as credit cards, personal loans, and home loans, can positively impact your score. It shows lenders that you can handle different forms of credit responsibly.
5. Limit Credit Inquiries
Applying for multiple loans or credit cards in a short span leads to hard inquiries on your report, which can hurt your score. Be selective and strategic about applying for new credit.
6. Keep Old Accounts Open
Even if you’re not using an older credit account, keeping it open can benefit your credit history, which contributes 15 per cent to your score calculation.
Abhay advises, ’Improving your credit score is a gradual process that demands financial discipline and patience. Even small steps, like clearing dues on time or limiting credit card usage, can make a big difference over time.’
