Educating Myself for My Education Loan

What if you wake up one day and no one trusts you? You can no longer buy the swankier car or that beautiful home you dreamt of. Have you ever had such thoughts? I have had, not very long ago. It was the monsoon of 2011 and India was witnessing some of the defining moments of the decade; Euphoria of India winning the Cricket World Cup, Mass mobilization against corruption inspired by Anna Hazare and Mumbai turning into a hot hunting ground for terror. Amidst all these, my heart was racing faster for my achievements of scoring 700+ in GMAT, grant of Scholarship from Wharton School and Said Oxford. I had landed in the kingdom of dreams. A dream of a joining a top 10 global MBA program bloomed.

Maroon 5 was right when they sang “Nothing lasts forever”. Before I could even climb the next ladder for my dreams, they were thrashed like the storyboard that had been tipped and jumbled, disjointing the order and twisting the timeline. Banks had refused to fund my remaining fees of 60 Lakhs for the education. I was being denied an opportunity because no one seemed to trust me.

Begging was the only form of request I hadn’t resorted to when I met Mr. Nelson, who rather than just rejecting my request, gave me a reason for not being able to help me. He told that my credit score was in the 500s, generally considered as a poor credit score, categorized as High-Risk Applicant by the Credit Bureau, and since it is one of the most important factors in the loan approval decision, no bank will consider giving me a loan with such a credit score.

I couldn’t rely on my heritage as both my parents are loan averse and had even discouraged me to apply for one. I realized that this new unknown “credit score” was standing between me and my dream. It was bizarre as I hadn’t heard of any such concept in the years of my preparation, not from any of my peers, not in any online forums, not in the coaching institutes, never. Having worked for top financial institutions and having traded in derivatives and share markets, I used to consider myself among the frontrunners in financial literacy. And, here I was not even aware of what a Credit Bureau was and what a Credit Score was, a part of the financial world which was about to change the course of my life.

On my way back home, I browsed through the internet to understand what a Credit Bureau was and why is the credit score so important. It was a sort of revelation to understand how critical credit scores are to lending and how most people like me aren’t even aware of it. I was of the view that I could find a way around this credit score and convince officials to grant me the loan, but then I knew, the only option left was to work on my credit score and park my dreams for the time being.

850. That was the number printed on my latest CRIF Credit Report. It’s an excellent credit score which is loved by every bank or lender I speak to. Today not only I am credit worthy, but I can ask for preferential interest rates on my loan. How did I get here? To unlock the trick or secret to an excellent credit score, read my next blog How I Raised My Credit Score By 250 Points.

About the Author: Subhankar Mishra works as Service Delivery Manager at CRIF High Mark, the only comprehensive Credit Bureau in India.