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Personal Loan
Emergency funds, credit score & loan access: A financial toolkit for every woman
Key Takeaways
Building an emergency fund covering 3–9 months of expenses is a key step toward financial security.
- Maintaining a strong credit score improves access to loans and better borrowing terms when needed.
- In urgent situations, emergency loans can provide quick financial support when savings fall short.
- A balanced financial toolkit: savings, good credit habits, and access to personal loans helps women stay financially prepared for uncertainties.
Financial stability and security are essential, particularly in today’s increasingly unpredictable environment. This need is even more important for women, to become and remain independent.
Several aspects are involved in achieving financial stability and security, such as saving, investing, obtaining structured financing, and more. This blog outlines essential financial must-haves for every woman, from building a substantial savings corpus to exploring financing options, such as a personal loan for women.
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Emergency Fund: Basics and Key Points
An emergency fund is a corpus you build to manage finances for emergency situations. This can be a medical emergency, a professional setback, or any personal need that must be addressed immediately.
Savings and investing are two effective ways to build an emergency fund. Here’s how to build an emergency fund according to the 3-6-9 rule:
- List down your essential expenses: monthly rent, utility bills, groceries, medical bills, loan repayments, and Insurance premiums.
- Multiply the sum of these essential expenses by 3, 6, or 9 months based on your situation.
- If you are single with no dependents, building an emergency fund that covers at least three months of essential expenses is viable.
- If you are married and both you and your partner earn, building a fund that can cover three to six months' essential expenses is suitable.
- If you are a sole earner or a single parent, building a fund which can cover at least six to 12 months of essential expenses is necessary and advantageous.
- When setting aside your emergency fund, consider adopting a layered approach to ensure the money remains both secure and easily accessible when you need it.
- Consider keeping cash that can cover one month’s expenses in hand. This way, you can immediately take care of the expenses when they come up.
- You can use a Savings Account or Sweep-In Deposit to park funds that can cover at least three months of essential expenses.
- A Savings Account provides instant access to funds via ATMs and online transactions. On the other hand, the Sweep-In Deposit offers a higher interest rate, helping your emergency fund grow over time.
- Lastly, for saving an amount equivalent to 12 months of expenses, a Fixed Deposit (FD) is a good option. It keeps your corpus secure, offers a competitive interest rate, and lets you access funds instantly with a single redemption click.
The Importance of Credit Score in a Woman’s Financial Journey
In an emergency, if you do not have sufficient funds, credit facilities like a credit card or a personal loan can provide timely financial support.
To get easy access to such credit facilities, you need a strong credit profile. To build a strong credit profile, you need to:
Repay ongoing debt on time.
Keep a low credit utilisation ratio.
Avoid multiple loan applications at once.
Maintain a high credit score.
Your credit score is a 3-digit number that indicates your loan repayment behaviour. The higher the score, the better are your chances of loan approval with favourable terms.
If you have no credit history, you can build it gradually using tools like credit cards, buy-now-pay-later plans or consumer durable loans.
IDFC FIRST Bank offers the FIRSTmoney personal loan of up to ₹15 lakhs at a competitive interest rate starting from 9.99%. Eligibility criteria includes age, income and CIBIL score.
Loans For Emergencies
As mentioned, emergencies can arise at any time, regardless of your preparedness. Here’s when applying for an emergency loan is helpful.
Here’s how the IDFC FIRST Bank FIRSTmoney personal loan can help you navigate through emergencies:
Collateral-free: You may or may not have an asset to secure a loan. Keeping this in mind, IDFC FIRST Bank offers collateral-free personal loans via FIRSTmoney to help you meet your financial needs without hindrance.
Simple application: With IDFC FIRST Bank, you can apply for a FIRSTmoney smart personal loan in minutes using your PAN and Aadhaar number and showing your original PAN card during video KYC.
Instant Disbursement: Emergencies require you to take prompt and swift action. IDFC FIRST Bank understands this and, to provide support during critical times, it disburses approved loans within just 10 minutes via FIRSTmoney.
Multiple-purpose use: Sometimes problems can come from all directions, but you need not worry. IDFC FIRST Bank has you covered. Its FIRSTmoney smart personal loan has no end-use restrictions, allowing you to fulfil your financial requirements as they arise.
On-demand Loans: At times, an emergency can escalate beyond what one can anticipate or manage. Knowing this, FIRSTmoney personal loan by IDFC FIRST Bank offers multiple on-demand loans, so you always have access to funds when you need them. Interest is charged only on the amount you withdraw.
Summing it up
Expenses associated with a sudden medical emergency, relocating to a new city, job loss, etc., can drain your savings. Therefore, setting up an emergency fund is crucial for your financial well-being. When a sudden emergency arises, and you have no contingency fund, a convenient option would be to opt for a personal loan. To get approved quickly, your credit score needs to be high.
Frequently Asked Questions
How much emergency fund should women ideally maintain?
The amount of the emergency fund varies from person to person. However, it should cover at least 3 to 9 months of expenses.
Does taking a personal loan affect your credit score?
Yes, it does. Making timely repayments towards a personal loan demonstrates responsible credit behaviour, which can increase your credit score. However, delayed and default repayments can negatively impact your credit score.
When is it better to use savings vs a loan for emergencies?
Whether to use savings or a loan in an emergency depends on the nature and urgency of the situation. Generally, if your requirement is significant and urgent, applying for a personal loan may be viable. IDFC FIRST Bank offers an urgent loan of up to ₹15 lakhs via its FIRSTmoney offering, with approval and disbursement within 10 minutes.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
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