‘You need to have credit, to get credit’ – As confusing as it sounds, this is the truth of the financial world. 

If you want a credit card or loan, the lender wants your credit score; which is not possible to build if you don’t have credit. Then how does a starter build credit? How can he achieve the ideal score of 750 to get the best loans in the market?

Don’t worry. There are umpteen ways to build credit when you are a newbie. We will tell you how!

1.  Apply for a Secured Credit Card

A secured credit card is issued against a fixed deposit. Nevertheless, it comes with all the features and benefits of a credit card and helps you build credit. You can easily qualify for these credit cards as they are based on your fixed deposit with the bank. This is a great way to start building your credit. 

Eventually, since your information is submitted to credit bureaus often, secured credit cards will help you create credit faster. Every month, several credit card issuers send details about your credit card balance and payment. So, if you make a purchase or two per month and then pay them off, your credit history will reflect it.

You can even opt for ‘Student Credit Cards’ that are specifically designed for students and young professionals. This will be a good starting point for you to start building your credit from a young age. 

2. Include Your Name in an Add-on Card

You can piggyback on your family member or friend’s credit card and get an add-on card. Since it is not based on your eligibility criteria, you can get it easily. Use this card for your monthly expenses which will in turn build your credit. But ensure that you maintain the card responsibly by using it within your repayment capacity and by making timely bill payments. Misusing the card or defaulting on payment will have an adverse effect on both your credit scores. 

Also, check to see if your family member or friend has good credit and is careful with their credit card. You don't want to become an approved user on an account that has a balance or a history of late payments, so those negative acts would show on your credit report, negating any credit-building efforts you make.

3. Get a Credit-Builder Loan

Get a low amount loan and start repaying it. This is one of the best ways to build credit. You can opt for student loans or personal loans. These are flexible loans where you can choose a lower amount and they are also unsecured loans which you can get much easier. 

But remember, the key point is to repay the loan on time without any defaults. Missing payments will only affect your chances of building credit. 

While you are planning to get loans, remember to diversify the loans so that you get a good credit mix. Also, ensure that you are borrowing only what you can repay comfortably. We do not want to overstretch and cause more harm than good to our credit score. 

How To Achieve And Maintain A Good Credit Score?

If you want to get a good loan or credit card, your credit score is vital. Your credit score is a three-digit number that determines your trustworthiness. It usually ranges between 300 to 900. Your loan application or credit card application would be approved more likely if your credit score is closer to 900.

The primary factors that affect your credit score are: 

  • Payment History
  • Credit and loans you owe to lenders
  • Length of your credit history
  • New credits you have applied in the recent past
  • The types of credits and loan types you hold

For someone building their credit from scratch, financial discipline is very important. You need to carefully plan your monthly finances to ensure that you make timely payments towards your debt. You can follow these simple steps to achieve a good credit score and maintain it: 

Don't get behind on payments: Keep track of all of your monthly bills and make sure they're paid on time. Even if it is a legitimate omission, missing payments have a negative impact on your credit ratings. To ensure that monthly EMI payments are made on time, you can use resources such as auto-debit, standing instructions, or NEFT mandates. If you're paying by check, make sure you send it in well ahead of the due date to allow for the clearance period.

Limit your credit utilization ratio: Using your credit card to the full limit is one of the easiest ways to improve your credit score. Keep your monthly credit card bill to less than 10% of your credit cap. If you have a credit limit of Rs. 1 lakh per month, for example, make sure your bill does not exceed Rs. 10,000 per month. If you use more than 10% of your credit card cap, you'll have trouble budgeting and won't be able to save enough to pay off your debts. Your score will drop as a result of this.

Pay attention to your co-applicant's spending habits: If you don't keep an eye on your co-applicant's spending habits, you could end up bearing the brunt for no reason. If you are a joint loan applicant with someone else who has defaulted on payments, your credit score will suffer as a result and will show up on your report. The best way to avoid this is to make sure that all loan and credit card payments are made on time by all cardholders.


  1. How long does it take to build my credit from scratch?

It usually takes about 2-6 months to build credit from scratch. 

  1. How can I build my credit from scratch?

You can follow these steps to build your credit from scratch: 

  • Become an authorized user on your family member or friend’s credit card
  • Get a secured credit card
  • Get a small amount installment loan and repay it regularly
  1. How long does it take to build a credit score of 800?

Depending on your credit history, it can take up to a few years to achieve an 800 credit score. 

  1. How long will it take to increase my credit score from 500 to 750?

Depending on your credit management, it may take around 1 to 3 years to increase your credit score from 500 to 750. 

  1. What credit score will your credit report start with?

Your initial credit report will start with a credit score of 300. Based on your credits and loans, this score will slowly improve and can reach up to 900.