Gen-Z Becoming More Conscious About Credit Rating; Know Why; Benefits Of Good Score
As a recent report by the Credit Literacy Index said that over 56.8 per cent of millennials actively monitored their credit score in FY22 vis-à-vis 48 per cent in FY21, Gen-Z and millennials have become all the more important for the Indian credit market. On the role and importance of Gen-Z in the Indian credit market, News18.com talks with Aditya Soni, founder and CEO of B2C credit management platform CheQ.
He said that with about nine million active credit accounts, Gen Z has driven lenders to create more robust underwriting models that go beyond credit scores and offer more personalised products and services that fit their lifestyle.
Gen-Z or Generation Z are those who are born during the mid to late 1990s and the early 2010s, while millennials are anyone born between 1981 to 1996.
How Is Gen-Z Shaping The Indian Credit Market?
Gen Z is fueling the growth of credit consumption in India. Having grown up at the foot of digitisation, they have access to plenty of information to guide their financial decisions. Previously, it was difficult for younger consumers to access credit because they had short or non-existent credit histories. Today, lenders recognize that Gen Z are the consumers of tomorrow and are undertaking active steps to earn their trust and business. With approximately 9 million active credit accounts, Gen Z has driven lenders to create more robust underwriting models that go beyond credit scores and offer more personalized products and services that fit their lifestyle.
Modern fintechs and NBFCs have been instrumental in driving credit inclusion in this cohort of consumers through no-fees and low interest offerings. At CheQ, we want to further improve Gen Z’s relationship with credit by simplifying its understanding and management. Our robust rewards program will incentivize good behavior and fuel credit growth in the country for years to come.
Millennials Are Turning Most Credit-Conscious In The Country. What Reasons Are Behind This Popularity Among Millennials?
It is encouraging to see an increase in credit consciousness amongst millennials in India. This can primarily be attributed to growing financial literacy over the years. Credit has traditionally been a sensitive topic in India, with very little active discussion around it. We are slowly evolving from this mindset as fintechs and online platforms are driving active conversations around the importance of credit and its utility. Millennials are now realizing that managing credit intelligently is important for their financial well-being and that a good credit score can go a long way in securing a better car loan or mortgage. This encourages borrowers to start self-monitoring even before they take the loan.
What Are Some Of The Extraordinary Benefits That Credit Scores Offer Besides The Known Ones Like Ease Loan Approval, etc?
A good credit score can unlock a number of benefits from low interest rates on loans to higher credit limits. Some of the less-known benefits include — higher negotiation power over lenders for a better interest rate or lower processing fee; you can also get quicker approvals on loans as lenders will be able to take faster decisions regarding your credit applications, this is especially helpful when you are in an emergency and need some quick funds. Another advantage is that you can get better insurance rates.
Insurance companies use information from your credit report and insurance history to develop your insurance risk score, so they often penalise people who have low credit scores with higher insurance premiums. A good credit score also awards great bragging rights!
Why Is Credit Score Monitoring A Need Of The Hour And What Are The Ways To Foster This Awareness Among All Generations?
We need to have more conversations about credit to destigmatize it and regular credit score monitoring is one way to achieve that. It helps consumers understand how their financial activities impact their credit health and identify areas where they can improve and implement corrective measures.
Regular credit score monitoring also reduces the impact of identity theft by instigating immediate and appropriate action. We can improve credit score awareness by simplifying its understanding, making it more socially relatable and coupling it with actionable insights that go beyond what’s available to consumers today.
Read all the Latest Business News here