Start Young, Build Smart: Why Students Must Establish Strong Credit Scores Early

In India, as in many countries, credit scores have become essential indicators of a person’s financial responsibility. For students and young adults, building a strong credit score early can dramatically influence their ability to access future loans, credit cards, housing, and even employment. A credit score — a three-digit number ranging from 300 to 850, is used by banks, lenders, landlords, and even employers to judge an individual's reliability in handling money. Yet, it's a concept rarely emphasised during school years, even though its impact stretches across one’s entire adult life.

A credit score reflects an individual’s financial behaviour — from repayment history to debt levels — and determines how likely they are to repay borrowed money. It is calculated by credit bureaus regulated by the Reserve Bank of India and ranges as follows:

• 300-579: Poor
• 580-669: Fair
• 670-739: Good
• 740-799: Very Good
• 800-850: Excellent

Many students fall under the "new to credit" category with little or no history. But being financially disciplined early can build creditworthiness and ease access to future credit at lower interest rates. A high score gives borrowers negotiating power, while a low one may result in rejections or higher charges. Landlords, insurers, and even employers may evaluate credit scores as a proxy for dependability.

Good credit is funny — it's rarely discussed when you're younger, yet suddenly becomes a determining factor in virtually every adult financial transaction, including housing, education, or entrepreneurship.

Establishing a relationship with a bank through an active savings or chequing account also helps. It lays the foundation for future credit approvals by creating a financial track record. Moreover, the introduction of new education loan products by non-banking financial companies, including simple and partial interest repayment schemes, means students are engaging with credit systems earlier. This helps inculcate fiscal responsibility and credit awareness.

In essence, developing a strong credit profile during one’s academic years is no longer optional — it's a financial milestone that can determine the ease or difficulty of adult financial decisions. Used wisely, credit is not a trap but a tool to greater opportunities.