How to educate your children about CIBIL score? Here are 6 steps
Children should be taught about responsible financial behaviour, which also includes the concepts relating to credit score, also known as CIBIL score.
While teaching children about money matters, you should emphasise the significance of paying bills on time, and importantly not taking more debt than you can afford.
As you discuss with them, you should tell them how having a good credit score can lead to lower interest rates and better financial opportunities, whereas a poor credit score can make it harder to procure loans or even rent an apartment.
1. Start with the basics: You should start by explaining what a credit score is and why it’s important. You can simplify it by saying that it’s like a report card for how well you manage your finances.
2. Use real-life examples: You should share examples from your own life or stories about people they know who have had good or bad credit scores and how it affected their ability to do things like buying a house or getting a loan.
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3. Explain how credit scores are calculated: You should break down the factors that contribute to a credit score, such as payment history, credit utilisation, length of credit history, types of credit, and new credit inquiries.
4. Teach them to monitor their credit: Parents should show them how to check their credit report regularly and explain why it's important to spot errors early.
5. Set a good example: Children tend to learn by observing their parents' behaviour, so you should show responsible financial habits in your own life.
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6. Encourage them to ask questions: You
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