How women can leverage credit scores for financial independence

How women can build strong credit history to gain easier, cheaper access to loans

In recent years, women have made considerable progress in achieving financial inclusion. They are taking control of their financial future and making independent decisions regarding property ownership. In fact, many women today are embracing financial independence, with homeownership as a key goal.

As per our data, over 8.31 crore women in India are active borrowers as of December 2024, accounting for 20.85 percent of the country’s total borrowers. Over the past five years, the annual growth rate for women borrowers has been 87 percent, outpacing the growth rate for men.

Additionally, the outstanding portfolio of women borrowers grew to Rs 36.5 lakh crore in Dec 2024, up from ₹30.9 lakh crore in December 2023, registering an 18 percent year-on-year growth.

The number of women borrowers with active loans increased to 8.3 crore as of December 2024, up from 7.5 Crore as of December 2023, with a YoY growth of 10.8 percent. In contrast, the number of men borrowers with active loans increased to 20.3 crore as of December 24, up from 19.1 crore as of December 2023, with a YoY growth of 6.5 percent.

These numbers reflect a growing trend of women actively participating in the financial landscape.

Role of credit in homeownership

While Indian women are progressively embracing the concept of homeownership, credit plays a vital role in enabling them to access funding and resources necessary for achieving their goals and aspirations. But a crucial factor in securing a home loan is the credit score. For those who don’t know, a credit score represents a person’s creditworthiness, and it plays a pivotal role in determining loan eligibility and terms. By managing their credit scores effectively, women can unlock homeownership, gaining greater financial freedom and security.

A good credit score can open doors to financial opportunities, but building and maintaining it isn't always straightforward — especially for women, who often encounter unique challenges in their financial journeys.

Also read: How credit score is calculated and what affects it: Explained

Challenges faced by women in building credit history  

The gender pay gap is one of the most pressing issues. According to an International Labour Organization (ILO) study, the gender pay gap in India is almost 34 percent.  This gap further widens in certain sectors, such as technology, where women earn significantly less than men. Lower earnings arising from the pay gap not only limits women’s ability to save but also impacts their ability to build credit, making it harder to qualify for loans, and potentially leading to smaller credit lines.

Career breaks for family responsibilities pose another significant challenge. Motherhood and caregiving responsibilities often require women to step away from the workforce. These career interruptions reduce income stability and growth, making it difficult for women to build a strong financial profile or establish a reliable credit history.

Building a credit profile as a homemaker 

For homemakers aspiring to become homeowners, building a credit profile is a crucial first step. Without an established credit history, it can be challenging to qualify for home loans or secure favourable interest rates. Here are some practical steps women can take to start building their credit profile.

·         Apply for a secured credit card with a fixed deposit and use it responsibly for small purchases, ensuring timely payment the balance. This builds a repayment history over time and helps in improving your credit score.

·         Choose the ‘Buy Now, Pay Later’ option when shopping provided you can make timely repayments. These services report to credit bureaus and a positive credit history helps build your credit score.

The power of a good credit score for homeownership 

A good credit score is the foundation of financial independence and is particularly critical for homeownership. Women with strong credit scores can secure better loan terms, such as lower interest rates and higher loan amounts, making it easier to own a home. In addition, a high credit score means lower costs over time, making homeownership more affordable.

According to our data, women are increasingly availing home loans, with nearly one-third of home loans now being taken by female borrowers. Our data shows that the value of Home Loan originations for women borrowers increased by 11.8 percent between CY 2022 and CY 2024.

Here’s how women can maintain a strong credit score and secure favourable interest rates on their home loan:

·         Make timely credit repayments as late payments lower your scores.

·         Limit your spending to keep credit use below threshold.

·         Maintain a mix of secured and unsecured credit.

·         Regularly access your credit report for errors that could impact your score.

With the right strategies, women can turn their aspirations into reality, transitioning from homemakers to homeowners and achieving true financial security.

(The author is Chairman, CRIF High Mark and Regional Managing Director, CRIF India & South Asia)

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