Credit Uptake: Personal loans top the list for women borrowers

A study by CIBIL shows 53% of women borrowers had a score of prime (731-770) and above compared to 47% for male borrowers last year.

More Women are going for personal loans and consumer durable loans as they  enter the workforce, become financially independent and seek higher standards of living. As they usually exhibit better financial discipline and have higher credit scores than men, they are easily able to get approval for loans. The emergence of new-age lenders has also helped them in this journey.

A study by CIBIL shows 53% of women borrowers had a score of prime (731-770) and above compared to 47% for male borrowers last year. Even the 90-plus days-past-due consumer-level delinquency rate for women borrowers is at 5.2% across retail products compared to men borrowers at 6.9%.  In fact, CIBIL Score above 750 can help consumers get a quick loan approval and banks charge a lower interest rate for higher credit score.

Growth in credit uptake

The study shows a rapid growth in credit uptake by women across rural and urban areas. The number of women borrowers has shown a compounded annual growth rate of 19% in the last five years. The share of women borrowers increased to 29% to 54 million in 2021, from 25% in 2016. Credit penetration for women —percentage of borrowers to total adult population—has gone up to 12% in 2021 from 6% in 2016.

The study shows the footprint of women borrowers in semi-urban and rural areas. expanding at 21% CAGR between 2016 and 2021 as compared with 16% growth in metro and urban areas. The overall share of women borrowers in semi-rural and rural areas has risen to 62%.

Harshala Chandorkar, chief operating officer, TransUnion CIBIL, says women borrowers are creating a niche in the credit sector, and when supported well by the credit industry and policymakers can significantly contribute to economic resurgence and financial inclusion.  

Credit consciousness

Last year, more than 5.7 million women accessed their CIBIL score and report. In terms of type of loans availed by women borrowers, personal loans and consumer durable loans top the list with 43% availing a personal loan and 19% availing a consumer durable loan. The study shows that after checking their CIBIL score, 40% of women worked towards improving their credit profile and bettering the credit score. Among the self-monitoring women consumers who improved their CIBIL score, 43% improved their score by over 20 points.

Experts say the interest rate on home loans for women is always lower, regardless of their marital status. State governments also give them a 1-2% concession in stamp duty. With a good credit score, financial profile, steady income stream and even tax exemptions, the stage is  set for more women going for big-ticket home loans in the future.