A good credit score in India is essential for financial stability. Whether you’re looking to apply for a home loan, personal loan, or even a credit card, your credit score plays a key role in determining approval and interest rates. But if you’re just starting out, building a credit score from scratch can be confusing. In this article, we’ll break down everything you need to know to build a credit score from zero in India—without making costly mistakes.
What is a Credit Score and Why Is It Important?
A credit score is a three-digit number that represents your creditworthiness. It usually ranges from 300 to 900. In India, it is calculated by credit bureaus like CIBIL (TransUnion), Experian, Equifax, and CRIF High Mark. A score of 750 or above is considered excellent.
Banks and lenders use this score to decide whether to approve your loan or credit application. A higher score gives you better access to credit products, lower interest rates, and faster approvals.
First Step: Start with a Bank Relationship
The first step in building your credit profile is to open a savings account with a trusted bank like SBI, HDFC, or ICICI Bank. While savings accounts do not directly affect your credit score, they are the foundation of your financial history. Having a stable income (salary or freelance) linked to your account also helps when applying for credit later.
Use a Secured Credit Card to Begin Your Journey
If you’re a new borrower, getting an unsecured credit card can be difficult. That’s where secured credit cards come in. These are issued against a fixed deposit and are the best tools to build credit safely. For example, you can get an SBI SimplySAVE Secured Card or ICICI Instant Platinum Card with a deposit of just ₹10,000.
Use the card regularly and make full payments before the due date. Within 6 months, your on-time payments will be reported to the credit bureau, and your score will start to grow.
Consider Small Loans from NBFCs
Another smart way to build credit is by taking a small personal loan or consumer durable loan. Many NBFCs like Bajaj Finserv, Tata Capital, and L&T Finance offer small-ticket loans to new borrowers. These loans are easier to get approved for and help you show consistent repayment behavior.
Just make sure to never miss an EMI. A single late payment can negatively affect your score, especially when your credit history is still new.
Make Timely Payments and Keep Utilization Low
Your payment history accounts for a major portion of your credit score—nearly 35%. The golden rule is simple: always pay your bills on time. Set up auto-debits to avoid forgetting due dates.
Another smart banking habit is to maintain a low credit utilization ratio. This means not using more than 30% of your available credit limit. For instance, if your credit card limit is ₹30,000, try to spend only ₹9,000 or less per month on it.
Avoid Multiple Credit Applications at Once
Many new users make the mistake of applying for multiple credit cards or loans at once. Each application results in a hard inquiry on your credit report. Too many inquiries in a short time can signal risk to lenders and lower your credit score.
Apply for only one product at a time and wait for the result before moving to another. You can also check for pre-approved credit offers through your bank’s mobile app or online portal to avoid unnecessary inquiries.
Keep Your Oldest Credit Account Active
As your score builds, you might be tempted to close your first credit card and switch to a better one. Avoid doing this. Your credit age (how long you’ve had credit) is an important part of your score. Keeping your oldest account active helps establish a long-term positive history, which banks love.
Instead of closing it, keep using it occasionally and pay it off on time. This maintains your credit history and increases your overall creditworthiness.
Use Online Tools to Monitor Your Progress
Today, you can monitor your credit score for free using websites like:
Tracking your credit score monthly helps you stay informed and fix any errors early. Some platforms even suggest ways to improve your score faster.
How Long Does It Take to Build a Credit Score?
If you follow these practices consistently, you can expect to build a score of 700+ within 9 to 12 months. To reach a score of 750+, you may need up to 18 months of disciplined credit usage. This opens up access to premium loans, higher card limits, and better financial offers.
Final Thoughts: Discipline is the Key
Building a good credit score from scratch is not about how much money you earn, but how responsibly you handle credit. Start small, stay consistent, and avoid unnecessary risks. By making on-time payments, using credit wisely, and monitoring your credit report, you’ll soon achieve a score that puts you in the financial fast lane.
If you’re planning to apply for a home loan, car loan, or business credit in the next few years, start now. A strong credit score is not built overnight, but with the right steps, you’ll reach there faster than you think.
