If you’re just starting out financially — whether you’re a student, a new professional, or someone who has never taken a loan or credit card — you probably don’t have a credit score yet. In India, having a strong credit score is crucial for getting approved for loans, credit cards, and even securing better interest rates. Here’s a detailed step-by-step guide on how to build a credit score from scratch in India.
What is a Credit Score?
A credit score is a 3-digit number ranging from 300 to 900 that represents your creditworthiness. It is calculated by credit bureaus like CIBIL (TransUnion), Experian, Equifax, and CRIF High Mark based on your credit history.
Why it matters:
- A high score (750+) improves your chances of loan approvals.
- It helps in getting lower interest rates.
- Some employers and landlords may check your score as part of background checks.
Step-by-Step Guide to Build Your Credit Score in India
1. Apply for a Secured Credit Card
If you have no credit history, most banks may reject unsecured credit card applications. Instead, go for a secured credit card, which is issued against a fixed deposit (usually ₹10,000–₹25,000).
Top options:
- ICICI Bank Coral Credit Card against FD
- Axis Bank Insta Easy Credit Card
- SBI Card Unnati
Make small purchases and repay in full before the due date.
2. Take a Small Consumer Durable or Personal Loan
If you’re salaried or self-employed, start with a small loan, such as a consumer durable loan for a mobile/laptop or a personal loan from a fintech platform.
Pro tip: Look for NBFCs or digital lenders like PaySense, KreditBee, or CASHe, which often approve first-time borrowers.
3. Become an Authorized User or Add a Co-signer
Ask a family member (like a parent or sibling) with a good credit history to:
- Add you as an authorized user on their credit card
- Be a co-applicant on a small loan
Their positive payment history helps boost your credit profile.
4. Pay All Bills and EMIs on Time
Your payment history contributes around 35% to your credit score.
Set up auto-debit or calendar reminders to avoid delays. Even a single missed EMI or credit card bill can lower your score.
5. Keep Your Credit Utilization Ratio Low
Don’t max out your credit card. A good rule is to use less than 30% of your credit limit.
For example, if your credit limit is ₹10,000, try to keep spending under ₹3,000 monthly.
6. Avoid Multiple Loan Applications in a Short Time
Every time you apply for credit, lenders make a hard inquiry, which affects your score slightly. Too many applications in a short period can make you look credit-hungry.
Stick to one application at a time and wait for the result.
7. Check Your Credit Report Regularly
Track your progress by checking your credit report at least once a year.
Where to check for free:
- CIBIL official site
- Experian India
- [Paytm, BankBazaar, or Paisabazaar]
Check for errors or outdated information and raise disputes if needed.
How Long Does It Take to Build a Credit Score?
Typically, it takes 3 to 6 months of consistent credit activity (timely repayments, low usage) to start generating a CIBIL score. Reaching a score above 700 can take 12+ months, depending on how responsibly you use credit.
Common Mistakes to Avoid
- Paying only the minimum due: Always pay the total bill amount.
- Defaulting on loans: This creates a long-term negative impact.
- Closing old credit accounts: Length of credit history matters — keep old cards active.
- Taking too much credit at once: Start small and grow steadily.
Final Tips to Fast-Track Your Credit Score Growth
- Use your credit card for essential bills like mobile recharges, utility bills, or subscriptions.
- Maintain a healthy mix of credit (e.g., one credit card + one small loan).
- Increase credit limits gradually, but keep usage low.
Conclusion
Building a credit score in India from scratch isn’t difficult — it just takes patience and discipline. Start small with a secured credit card or a low-value loan, pay on time, and avoid overspending. Within a year, you’ll have a solid credit foundation that opens doors to better financial products.