Unawareness of credit scores:
A credit score is a measure through which the lenders assess the borrower’s eligibility for loans. Our economy consists of numerous people who are facing unawareness of credit scores. Around 68% of people do not know the meaning of credit score. For this, Home Credit India, a consumer finance provider across Europe and Asia conducted a research in 7 cities to know the economic literacy of the borrowers.
According to the survey of the whole group, it said, “Interestingly, this group has already taken a loan and yet does not know about credit score. Despite this, 68% of the respondents in this group did not know their credit score. The numbers were lower than the country average in Patna with only 22% of borrowers aware of their credit score, followed by Kolkata (25%) and Mumbai (25%)”.
Under RBI’s information, 4 CICs in India have credit reports of the borrowers. They are CIBIL, Experian, CRIF Highmark and Equifax. The credit score ranges from 300-900. Best-900. Credit scores are always generated in 3 digits.
In the survey, it was found that around 76% of people do not know the interest rate on their loans. The survey claimed, “They are only interested in knowing the equated monthly instalment (EMI) amount to be budgeted monthly but were found to be unaware of the interest amount separately. Only 17% of borrowers in Delhi, 19% in Jaipur and 24% in Mumbai knew the interest amount on their loans, on asking.”
43% of people were unaware of how to calculate interest on the loan and 50% did not have any knowledge about mutual funds. It is all about the unawareness of credit scores. This research on financial literacy is aimed at understanding our customers’ knowledge of their finances, and to help manage them better. The research revealed that a majority of respondents want to understand their finances better and are keen to take financial literacy lessons. The program is aimed at encouraging people to set life and financial goals, and provide them with the basics of money management to increase their financial awareness and success.” Said by Marko Carevic, chief marketing, and customer experience officer of home credit.
95% of the borrowers said that they know what is a bank passbook. 74% of respondents said that they would find it best if they were given financial literary classes. 44% of respondents fully understand the basic differences between credit and debit cards. 87% know about savings account and 80% know about the current account. Also, women’s financial literates are even lower in number than men.
Thus, from the above reading, we came to know how much unaware our population are about finance handlings in today’s date. Isn’t it alarming? The financial literary programme might help them to gain more knowledge about economic dealings. What do you think? Let us know your view after reading this article in the comment section.
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