Your credit score and report are crucial when you look to purchase a home, 4-wheeler, etc. Lenders make use of this info to determine if you are trustworthy to repay the loan. So, CIBIL score for personal loan, credit cards, home loans, and various types of loan products are important. Also, the requirement of CIBIL score for SBI personal loan, Axis home loans, and for various lenders offering various credit options may also be different. A few lenders may require you to hold a credit score of 700 and above while others may want you to keep a credit score of 750 and above.
In the case you have never made use of the credit before, it is crucial to begin forming a credit history. It would assist you when you place an application for a loan in the future. Read on to know how you can begin forming your past credit record –
How to form your credit with a zero-credit history?
Apply for the credit card
One of the prudent ways of building a credit past record is to place an application for a preferred credit card. You can place an application for a credit card through online route or by personally visiting the bank. A credit card is a straightforward and convenient way to form and ameliorate your score. There are majorly two kinds of credit cards – secured and unsecured.
Secured credit cards –
This is issued by credit card agencies and banks in exchange for security. Such credit cards are usually provided to borrowers who have no or little credit history and use them in a responsible manner to assist ameliorate their scores. You can simply get a secured card. This is a credit card against your fixed deposit account.
Also Check: CIBIL Score for SBI Personal Loan
Unsecured credit cards –
Unsecured credit cards basically are those cards that do not need any deposit or security to obtain the credit card. Also, they have better perks and offers than secured credit cards. So, once approved, the borrower is provided with the credit card limit to use the same for buys, which can be repaid in totality or in form of instalments in the next billing cycle. However, to get access to such credit cards, most issuers require you to have a credit history. You might, however, get hold of an unsecured card with a low credit card limit depending on your bank policies and income.
Make use of your credit card on a periodic basis –
Forming a positive credit record takes effort and time, so it's crucial for you to use your card on a periodic basis. This can involve making buys in person or through online mode and using the credit card for other transactions that may keep it active. If you already hold a credit record, using your card responsibly regularly can even assist you in maintaining a good score. It is crucial for you to remember to make payments of your credit card dues timely and keep your outstanding balances low to make the most out of your card usage.
Avail a small loan proceeds –
Availing a small loan like an education loan, personal loan or any secured credit like a two-wheeler can assist you to start your credit journey towards forming a credit history. This in turn makes it simpler for you to place an application for bigger loans in upcoming times.
Pay your credit timely –
Your credit repayments are an important way to form a credit score. Your credit repayment record is shared among credit bureaus to form your report and compute your score. In the case, you miss out or make late debt repayments, it may impact your score. To keep your score healthy, it is crucial for you to ensure you repay your dues timely. This infers paying the complete amount due every month and not missing out on any repayments. Just by making timely repayments, you tend to demonstrate to the lender that you are responsible for the credit and are likely to become an excellent borrower.
Generally, all such suggestions above can be best used for forming a credit history in the upcoming times. Besides this, it is best for you to connect with your respective credit card issuers or banks to learn more about what's required to build your credit record.
So, the answer to how you must form a credit record is to stay consistent with your credit transactions and make timely repayments. Both irresponsible credit behaviour and responsible credit behaviour have a tendency of impacting your score. As you start building your history, ensure that you are not missing out on the opportunities to ameliorate your score. Connect with the experts to know more about how you must form your credit record and what measures must to adopted to maintain the same.
Frequented asked questions (FAQs)
How quickly can you form a good credit history?
As per Experian, it takes at least 3-6 months of constant credit activity to form a credit record that can be utilised for computing a score. This means using a loan or credit card and making timely repayments on it for nearly 3-6 months can assist you in forming a good credit record. It is crucial to remember that establishing a credit record takes plenty of time, so it is necessary to remain patient and use the credit in a responsible way to form a pragmatic base for your score.
How long does it require to form a score of 750?
Rebuilding a score, which is damaged may take considerable time, typically 6 months to more than a year. During this time period, it is crucial for you to concentrate on using the credit in a responsible way and making all credit repayments timely. This can assist you to demonstrate to the banks that you can manage your credit responsibly, which may ameliorate your score over time. If you hold a strong score, it is crucial to continue making the credit repayments on time to maintain sound credit and improve it further.
