When to borrow and how credit scores help with borrowing

borrowing, home loan, education loan, credit score, credit card, future earnings, credit, how credit scores help borrowIt is an ideal situation to live a debt-free life as it offers peace of mind.

Borrowing provides a lump sum to purchase a product when there is not enough money in a customer’s hand. However, it is an obligation to use future earnings to purchase a product today. Since future earnings are at stake and any derailment of employment can cause difficulties in repaying the borrowed money, borrowing should only be done when absolutely necessary or to create wealth or to increase earning capacity.

When you can borrow

You can borrow to invest in assets that create value – such as taking out a mortgage loan to buy a home – or to generate returns – such as taking out a capacity expansion loan or taking out an education loan for higher education. fund yourself / children, etc.

Avoid taking out loans to buy FMCG products or writing off assets just for luxury – such as borrowing for personal expenses or irresponsibly using a credit card to fund expenses, etc.

It is an ideal situation to live a debt-free life as it offers peace of mind. However, you must maintain your credit with a good credit score so that you can easily get a loan at the time of need.


A credit score is a three-digit number – ranging between 300 and 850 – issued by a credit reporting company that indicates a borrower’s creditworthiness and is usually based on his / her credit history and other factors.

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A borrower’s credit score comes along with a credit information report and it would be higher if the borrower always repaid loans from banks / financial institutions on time.

Importance of credit score

A higher borrower’s credit score means more creditworthy and more accountable to the borrower.

In addition, banks / financial institutions, along with other factors, also determine and monitor borrowers’ credit score and credit history as they approve loans.

So all other things staying the same, borrowing would be relatively easier for a borrower with a higher credit score and that too at a lower interest rate.

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