Best Credit Card For Students | Best Credit Cards | Credit Cards For Beginners

Summary

The video emphasizes the importance of building a strong credit score and making wise financial decisions early in life. It explains how poor financial habits, like impulsive purchases and mishandling loans, can affect long-term goals such as buying a house or expanding a business. The speaker advises students to avoid unnecessary loans or credit cards and focus on securing a solid financial foundation through responsible credit use. With practical tips, it highlights the significance of patience, good credit management, and long-term planning for financial success.

Takeaways

• 😀 A good civil score (credit score) is essential for securing loans, especially for large purchases like a house or business expansion.
• 😀 Saving from a salary alone is often insufficient to afford major investments like a ₹5 crore house, making loans crucial.
• 😀 Poor civil scores can lead to higher interest rates when securing loans, significantly increasing financial burdens.
• 😀 Students should avoid loans for non-essential purchases like luxury items (e.g., iPhones) to protect their civil score.
• 😀 Many loan apps on the market are not RBI-regulated and can compromise personal data, leading to blackmail and scams.
• 😀 Even RBI-regulated loan apps may charge extremely high interest rates that can financially strain individuals.
• 😀 It is better to build a civil score over time through responsible financial habits like using a secured credit card.
• 😀 Once a solid civil score is established, individuals can apply for personal loans and credit cards more easily and at better rates.
• 😀 Do not rush into applying for loans, especially when you're not earning a steady income, as this can negatively impact your credit score.
• 😀 College students should focus on their education and financial stability first rather than rushing to get a credit card or personal loan.
• 😀 Building financial credibility takes time, so patience and consistency in managing finances are key to long-term financial success.

Q & A

Why is it important for students to be cautious about their civil score (credit score)?

Students should be cautious about their civil score because a poor credit score can prevent them from accessing loans in the future. This could make it difficult to buy a house, expand a business, or even get a car loan, as bad credit results in higher interest rates and rejected loan applications.

What is the potential risk of using unverified loan apps as mentioned in the video?

Using unverified loan apps can expose users to financial scams and personal data theft. These apps, especially Chinese loan apps, can access a user's contact list and gallery, and may even blackmail them with threats such as sending compromising photos to their contacts.

How can a student build their credit score if they do not have a regular income?

A student can start by applying for a secured credit card. This type of card requires an upfront deposit as collateral and helps build a credit history when used responsibly. Over time, this will improve their credit score, making it easier to access credit in the future.

Why should students avoid taking loans for non-essential purchases like gadgets or luxury items?

Taking loans for non-essential items such as gadgets or luxury items can harm a student's credit score. This poor credit history could impact their ability to secure important loans in the future, like home or business loans, where large sums of money are involved.

What is the recommended approach for students to maintain a good credit score?

Students should avoid unnecessary loans and focus on building their credit score slowly through responsible borrowing, such as using a secured credit card. They should avoid applying for loans or credit cards prematurely and instead focus on establishing a steady income and filing taxes to boost their creditworthiness.

What is the difference between a low interest rate loan and a high interest rate loan in terms of impact on financial health?

A low interest rate loan, typically available to those with good credit scores, is more affordable as it reduces the total amount paid over time. On the other hand, a high interest rate loan, often taken by those with bad credit, can significantly increase the cost of borrowing, leading to financial strain.

Why is it important to avoid impulsively applying for loans when you are not yet financially stable?

Impulsively applying for loans when financially unstable can lead to loan rejections, which will negatively impact your credit score. This can make it harder to obtain loans in the future, especially for larger, more important expenses such as buying a house or funding a business.

What are the consequences of a student not understanding the concept of civil score and its impact on future financial opportunities?

If a student does not understand the importance of civil score, they may engage in reckless financial behavior, such as taking loans for non-essential items or using unverified loan apps. This can lead to a poor credit score, which will affect their ability to secure loans for significant purchases, such as property or business expansion, later in life.

How does a bad civil score affect business owners seeking capital for expansion?

Business owners with bad civil scores may struggle to obtain loans from banks, which offer lower interest rates (7-8%). Instead, they may be forced to borrow at much higher rates (18-24%), significantly increasing their financial burden when expanding their business.

What is the ideal approach for applying for loans and credit cards as a student or young adult?

The ideal approach is to first establish a good civil score by using secured credit cards and managing credit responsibly. Once the civil score improves and steady income is established, students can apply for pre-approved loans or credit cards, which are less likely to be rejected.