Here’s how young professionals can start building their credit history

livemint.com:

As you start your professional journey and embark on your career path, it’s crucial to understand the importance of establishing a strong credit history. Your credit score plays a key role in shaping your overall financial well-being and opens doors to various opportunities. However, many young professionals face the challenge of having a limited or insufficient credit profile. By taking proactive steps and planning carefully, you can lay the foundation for a financially secure future.

Although building credit may not be your immediate priority, it holds considerable significance. Your credit score, acting as a comprehensive reflection of your responsible borrowing and repayment habits, plays a key role in numerous aspects of your financial life. It serves as a yardstick by which lenders evaluate your credit worthiness. When you apply for various financial products like loans or credit cards, lenders use your credit history to decide on your loan application and finalize the terms and conditions you may be offered. A strong credit history and a good credit score offer several benefits, such as qualifying for credit cards and securing lower interest rates on loans. By saving money on interest payments, you can allocate those funds towards investments that shape your future. Additionally, some employers in certain industries review credit reports during the hiring process, making a solid credit history crucial for job opportunities.

Lenders are increasingly leveraging alternative data sources and advanced analytics to evaluate creditworthiness of such customers to fulfil their borrowing needs. These lenders could be one of the first avenues that can be leveraged to start building your credit profile. To build a strong