Introduction: Why Building a Credit Score Matters
In today’s financial world, your credit score is your financial passport. Whether you’re applying for a home loan, a credit card, a car loan, or even a mobile postpaid connection, your credit score plays a pivotal role in determining your eligibility and interest rates.
But what if you’re just starting out and your credit score is zero or non-existent?
Don’t worry—you’re not alone. Thousands of students, young professionals, and first-time earners face this situation every year. The good news is that you can build a credit score in India from scratch—and this guide will show you how.
What Is a Credit Score?
A credit score is a 3-digit number that reflects your creditworthiness. In India, it usually ranges from 300 to 900. The most commonly used score is the CIBIL score, but other credit bureaus like Experian, Equifax, and CRIF Highmark also provide similar scoring.
| Credit Score Range | Meaning | Loan Eligibility |
|---|---|---|
| 750–900 | Excellent | Very high |
| 700–749 | Good | High |
| 650–699 | Fair | Moderate |
| 550–649 | Poor | Low |
| Below 550 | Very Poor | Very low or rejected |
| NA/NH (No History) | No credit history | Not eligible |
Who Has a Zero or No Credit Score?
You’re likely to have no credit score if:
- You’ve never taken a loan or credit card
- You’re a student or young professional with no borrowing history
- You’re a homemaker or retired person who never had credit
- You use only debit cards and never relied on credit
Why Is It Important to Build a Credit Score Early?
| Benefit | Description |
|---|---|
| Loan Approval | Easier access to personal, home, and car loans |
| Lower Interest Rates | Good scores fetch better terms |
| Higher Credit Limits | Banks trust responsible borrowers |
| Better Rental Deals | Some landlords and employers check credit |
| Financial Freedom | You become eligible for premium financial products |
Step-by-Step Guide: How to Build Credit Score from Zero in India
1. Get a Secured Credit Card
A secured credit card is one of the best ways to start building credit from zero.
- Backed by a fixed deposit (usually ₹10,000 or more)
- Available even without a credit history
- Works just like a regular credit card
| Bank | Minimum FD Amount | Credit Limit | Annual Fee |
|---|---|---|---|
| SBI | ₹20,000 | Up to 85% of FD | ₹500 |
| ICICI Bank Coral | ₹10,000 | 85% of FD | ₹500 |
| Axis Bank Insta Easy | ₹20,000 | 80% of FD | NIL |
| Kotak 811 | ₹10,000 | 90% of FD | NIL |
Tip: Use 30–40% of your credit limit and pay full dues on time.
2. Apply for a Low-Limit Unsecured Credit Card
If you have a salary account or consistent income, some banks may offer you an entry-level credit card.
- Start with a low credit limit (₹10,000–₹25,000)
- Use it for essential expenses (fuel, groceries, mobile bills)
Pro tip: Set up auto-debit to pay full bills on the due date.
3. Take a Small Consumer Durable Loan
Many retailers and NBFCs offer zero-interest EMI loans on gadgets like smartphones, laptops, or TVs.
- No credit history required
- EMI tenure from 3 to 24 months
- Improves your repayment track record
Example: Buying a ₹30,000 smartphone from Bajaj Finserv on 6-month EMI can help initiate your credit footprint.
4. Start a Credit Builder Loan
Some fintechs and NBFCs offer credit builder loans to help people with zero or poor credit history.
- Loan is kept in a deposit account until fully paid
- On-time payments are reported to bureaus
- After repayment, the funds are released
Platforms: PaySense, CASHe, MoneyTap, KreditBee, and Slice offer such services.
5. Become an Authorized User or Add-on Cardholder
If your parent, sibling, or spouse has a credit card, you can:
- Become an authorized user or
- Get an add-on card
Their credit history reflects partially on your profile too (depending on issuer policies).
Caution: Only do this with someone financially responsible.
6. Use Buy Now Pay Later (BNPL) Wisely
BNPL services like LazyPay, ZestMoney, Amazon Pay Later, and Flipkart Pay Later are widely used.
- Easy to access and repay in monthly installments
- Most report to credit bureaus
- Timely repayment helps build your score
Don’t overuse BNPL—they are still short-term credit and can hurt your score if mismanaged.
7. Always Pay Your Bills On Time
This applies to:
- Credit card bills
- EMIs
- Utility bills (some may get reported to bureaus soon)
Even one missed or late payment can hurt your credit score early on.
Set payment reminders or auto-pay from your bank account.
8. Keep Credit Utilization Below 30%
If your credit limit is ₹20,000, try to spend not more than ₹6,000 monthly.
High credit usage signals dependency and increases risk.
Credit bureaus reward disciplined usage over long periods.
9. Monitor Your Credit Score Regularly
Check your credit score every 2–3 months to track progress.
You can check it for free on:
How Long Does It Take to Build a Credit Score?
| Action | Time Frame |
|---|---|
| First credit card/loan approval | Immediate |
| Score generation after activity | 3–6 months |
| Good score (700+) | 9–12 months of consistent use |
| Excellent score (750–800+) | 18–24 months of disciplined credit usage |
Mistakes to Avoid While Building Credit
| Mistake | Consequence |
|---|---|
| Missing payments | Severe negative impact |
| Applying for multiple credit cards at once | Lowers credit score |
| Maxing out credit limit | Shows financial stress |
| Closing old accounts too soon | Reduces average credit age |
| Ignoring credit reports | May miss errors or fraud |
Sample Timeline to Build Credit from Zero (12-Month Plan)
| Month | Action |
|---|---|
| 1 | Open secured credit card with ₹20,000 FD |
| 2 | Use card for ₹3,000/month and repay in full |
| 3 | Take BNPL for ₹5,000 (pay in 3 EMIs) |
| 4 | Apply for consumer durable EMI (e.g., laptop) |
| 6 | Get free credit report to check status |
| 9 | Increase credit limit or get 2nd card |
| 12 | Maintain usage under 30%, timely payments |
By month 12, you should have a credit score of 700+, provided there are no defaults.
FAQs on Building Credit Score in India
Q1. Can I get a loan with zero credit score?
A: It’s difficult but not impossible. NBFCs and fintechs may approve small-ticket loans at higher interest.
Q2. Does UPI or debit card usage affect credit score?
A: No. Only credit-related behavior (loans, credit cards, EMIs) affect your credit score.
Q3. How often does CIBIL update scores?
A: Monthly, depending on how regularly banks/lenders report your activity.
Q4. Will checking my credit score reduce it?
A: No. Self-checks are soft inquiries and don’t affect your score.
Q5. Can I build credit without a credit card?
A: Yes. Use EMI loans, BNPL services, and credit builder loans as alternatives.
Final Thoughts: Build Credit with Confidence
If you’re starting with no credit score, the process might seem intimidating—but it’s completely achievable with the right steps. Start small, be disciplined, and monitor your progress regularly.
The key takeaway?
Use credit responsibly, pay on time, and stay consistent—and in less than a year, you could go from zero to hero in the world of credit.