Children should learn about responsible financial habits, including understanding concepts like credit scores, also referred to as CIBIL scores.
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Explaining how a good credit score can result in lower interest rates and improved financial prospects, while a poor credit score can hinder loan approval, is essential.
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Here are the steps to impart knowledge about CIBIL score to your children:
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Initiate with the Fundamentals
Commence by elucidating the concept of a credit score and its significance, likening it to a report card for financial management.
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Utilise Real-Life Instances
Share personal anecdotes or narratives of acquaintances to illustrate the impact of good or bad credit scores on endeavours like home purchases or loan acquisitions.
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Clarify Credit Score Calculation
Dissect the components contributing to a credit score, including payment history, credit usage, credit duration, credit variety, and recent credit inquiries.
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Foster Credit Monitoring
Demonstrate the importance of regular credit report checks and the early detection of inaccuracies to children, emphasising its preventative benefits.
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Lead by Example
Exhibit responsible financial behaviours in daily life as children often emulate parental actions, thereby instilling positive financial habits.
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Foster Inquiry and Learning
Encourage children to pose queries and offer educational resources such as books or websites to facilitate further understanding and exploration.