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Introduction To be able to understand why you need a good credit score to represent you, it can be useful to be aware of the basics first. Once you grasp how credit works, you can not only avail all of the benefits, offers and rewards that come with different credit card transactions but also improve your credit score drastically.  What is credit?  In economics, a debit is a decrease in one’s assets and a credit is an increase in the same. When you get a bank account, a credit would mean an increase in your bank balance while a debit would mean a decrease in your balance.  Debits cause the flowing out of money from one’s expense account due to the costs incurred by the consumption of goods and services. Credit is the opposite. However, credit can become a liability in the case of an unpaid credit bill which is a debt that you must clear within a stipulated amount of time. What is an ideal credit score?  A credit score is a three-digit number that indicates how credit-worthy you have proved yourself to be with your past transactions. This is done by analysing your credit files which show how successful or unsuccessful you have been in clearing your credit bills on time. Thus, it indicates to your potential lenders how capable you are in handling the risk factor involved in borrowing money.  In India, credit scores can range from 300 to 900. Credit bureaus like CIBIL (Credit Information Bureau India Limited) are in charge of evaluating your credit score. You might have a score of about 700 and wonder what it means. Any credit score in the range of 700 - 750 is usually considered a decent one. Likewise, anything above 800 is considered an excellent score. However, credit scores of 650 or less might not be considered strong enough for lenders to approve high-interest loans to you.   How to build a good credit score? To build your credit score from scratch, you can start by applying for a secured credit card scheme. You can also choose the shortcut of building credit faster by becoming an authorised user of someone’s else preexisting account. It is easy to attain an ideal credit score with a few months of consistent credit activity. Once you have indulged in an amount of credit activity that is enough to generate a score, you can then focus on making it better.  The rules are simple - do not borrow more than you can pay back and make it a point to pay all your credit bills on time. Your credit score will get adversely affected if you miss a payment or default on a loan. Also, make sure to settle any pre-existing debts so that it does not prevent you from attaining the desired score.  Another factor that improves your credit score effectively is the diversity of your credit. A credit mix shows that you are equally capable of responsibly handling different kinds of credit, be it mortgages, personal loans or credit card bills.     What are the benefits of maintaining a good credit score?  The benefits of maintaining a favourable credit score are manifold. First and foremost, it creates a favourable impression upon prospective lenders. Building a good score and maintaining it helps you to easily avail future credits and loans. The higher the credit score, the more qualified you are to avail of low-interest loans.  The amount of money you get to borrow, known as the credit limit, also increases with a high credit score since money lenders or banks are thereby satisfied with your capability of paying back the money on time. Sometimes it even allows you to negotiate with lenders on interest rates. With an impressive credit file, you get to reap better rewards and benefits on credit products.  Even for your own financial health, building credit works as a favourable sign. Other than coming in handy while making big investments like getting a car or buying a house, it also implies your adeptness at managing your finances. In fact, car buyers with high credit scores often get better insurance rates than the ones with unsatisfactory scores.     You can also avail of education loans at affordable rates with a good credit score. You can download the EduFund app and apply for an education loan right away! FAQs What is credit? A credit means an increase in your bank balance while a debit would mean a decrease in your balance. What is a credit score? A credit score is assigned to every credit card owner, capable of borrowing money from a financial institute. The score indicates the borrower's potential in terms of trusty worthiness, repayment behaviour and past financial history. For example, you have defaulted on your credit card payments, then you are likely to have a bad credit score. But if you have financial discipline and make routine payments then you will have a good credit score. In India, credit scores can range from 300 to 900. Credit bureaus like CIBIL (Credit Information Bureau India Limited) are in charge of evaluating your credit score. What is a credit score and what is it used for? A credit score is usually a three-digit number to determine your borrowing capability, The lender can decide whether you are credit- worthy for applying for car, home or education loans in the long run. Credit worthiness is extremely important in building trust and showing your lender that you have the means and intent to pay back the borrowed money on time. Conclusion The thumb rule for building the ideal credit score is to borrow only as much as you can repay and to pay your bills timely. It is equally important to maintain that standard once you get to the top and secure it from any kind of deterioration. Knowing the correct ways of achieving these can make you more confident in choosing the right financial goals for yourself. Moreover, the added benefits of having an impressive credit score can work as the right kind of motivation for improving it.  

Comparing the expense of raising a kid with the joy of doing so can be emotionally upsetting, but it is wise to be aware of and plan for such costs. The saying "bacche do hi acche" (just two kids are good) makes economic sense given the high cost of rearing a child nowadays. The government has also embraced the proverb. The Constitution (Amendment) Bill, 2020, which has been introduced in the Rajya Sabha on February 7, 2020, contains a proposed amendment that will encourage the two-child policy to control population growth. Despite the uncomfortably high levels of inflation, these figures do not accurately reflect the hardship brought on by rising education costs because such costs are not included in the composition used to calculate price change over time. Here are a few of the costs and expenses incurred on children throughout their lives. The costs are based on average estimations based on current trends. Expenses at various life stages of your child 1. Up to pre-school In the first year following the child's birth, approximately Rs. 1 lakh is spent on baby care items, immunizations, and medications, all of which are fairly pricey in metropolitan and semi-urban areas. The first significant cost of a child's education appears when they become two years old in the form of a playgroup or daycare center. Depending on the amenities offered, this expenditure might be in the region of ₹50,000 to 1 lakh. Early in a child's life, spending on toys and clothing is significant because the child frequently outgrows them. 2. School expenses Up to 65% of parents spend at least 50% of their annual income on their children's schooling and extracurricular activities. Every parent wants the greatest education for their child, but growing school costs can often make that difficult. A respectable school collects annual tuition of ₹50,000 to 2 lakh. Assuming a 10% yearly education inflation rate, the 12 years from Grades 1 to 12 would result in an outflow of between ₹11 and 43 lakh. These expenses are separate from the child's tuition and extracurricular activities that they will be enrolled in. 3. Higher education The cost of a college education, which has been steadily rising, is the main expense causing concern for Indian parents. If studying engineering today costs, on average, ₹10 lakh, it will cost, on average, ₹40 lakh to 50 lakh in around 15 years. In the same way, it is reasonable to predict that a medical degree, which currently costs roughly ₹25 lakh, will exceed ₹1 crore in 15 years. Even after tax exemptions, parents can choose to finance their children's higher education with student loans, although the interest rates are still exorbitant. 4. Voluntary costs In addition to paying for education, a family may decide to upgrade their home to meet the privacy needs of their grown children. The expense of entertainment has also dramatically increased, particularly in urban areas. Birthday celebrations must be planned, gifts must be purchased, school-related cultural activities must be attended, devices must be handled, and so on. Additional read: What is the moratorium period in education loan? Financial planning and investments Financial planning is essential in light of the previous outflows to prevent parents from spending more on their kids than is necessary and from being unprepared for their upcoming retirement. There are also safety nets that need to be established, including getting enough insurance and setting up an emergency fund. Planning for their children's higher education is very important for parents. You should set aside roughly ₹13,000 every month for that purpose. O Over the next 20 years, if returns are on average 10%, you should be able to collect about ₹1 crore. Get a term insurance policy with a coverage amount of about ₹38 lakh to make sure that the ambition of pursuing higher education is not jeopardized by the premature death of the earning parent. If such an unfortunate event were to occur, the nominee may put the insurance payout of ₹38 lakh in a fixed deposit, generating an average post-tax return of 5% annually, to cover the ₹1 crore cost of higher education over 20 years. Conclusion In conclusion, careful planning and ongoing investment discipline will make sure a family is better equipped to handle all of the expenses without stress. Hence, other than the basic school fees, many expenses are required to be done while raising your child. This is not something to get scared of, rather with proper planning, it is not as difficult as it sounds. Nobody said raising a child would be easy, but with adequate help, it will be the most beautiful thing you ever do. Furthermore, if there is any confusion or concern about these financial issues, our team of financial advisors at EduFund is fully equipped to help you out and guide you wherever you need it. Consult an expert advisor to get the right plan TALK TO AN EXPERT