Small-ticket loans: How to start your credit journey amid the festive season?

livemint.com:

The festive season in India is much more than just a time for celebration. It's a time when families come together, homes are adorned with lights and decorations, and everyone eagerly anticipates the joyous times ahead. But in recent years, the festive season has taken on another dimension—it has become the ideal time for many to start their journey into the world of credit. Millennials and Gen Z are more excited about the new things they can do with credit rather than just the idea of credit itself.

This shift in perspective is quite significant. Having access to credit has become a vital part of our financial lives, with its impact extending far beyond just purchasing goods and services. It is crucial to emphasise how credit can significantly influence various financial opportunities, such as future loans, mortgages, and even job prospects.

Understanding the significance of a good credit score is essential. It acts as your financial report card, exerting a profound influence on various aspects of your financial life. Lenders rely on your credit score when you apply for loans, making a higher score crucial for increasing your chances of loan approval and securing favourable terms like lower interest rates. A strong credit score can also lead to lower interest rates on loans, resulting in substantial savings over time. Additionally, it plays a pivotal role in mortgage approval, job prospects, increase in credit limit, providing you with greater financial flexibility.

Small loans, particularly during the festive season, offer an excellent starting point for those new to credit. They come with several advantages, including lower risk due to smaller borrowing amounts, and providing an opportunity to practise budgeting.