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Manish Jain, Experian India MD, shares tips on building a strong credit profile with low or no credit history. Learn how to improve your credit score effectively.
Tips to build good credit score
How To Build Good Credit Score: A credit score is a three-digit number that reflects an individual’s creditworthiness, indicating the likelihood of timely credit repayment. Ranging from 300 to 900, a higher score signifies a stronger credit profile. With a higher score, individuals are more likely to get loans or credit approvals on favorable terms with lower interest rates, as it showcases sound credit behavior and responsible financial management.
This score is derived through an extensive analysis of an individual’s credit information, using robust data analytics and algorithms.
TransUnion CIBIL, Experian, Equifax, and CRIF High Mark are allowed to provide a credit score to individuals in India.
How Can Someone With A Low Or No Credit History Build A Strong Credit Profile?
Manish Jain, Country Managing Director, Experian India explains to News18 English on how someone can with a low or no credit history build a strong credit profile.
Starting With No Credit History
For individuals with no credit history, Jain says, a secured credit card requiring a fixed deposit as collateral or a small loan can be an effective starting point.
When used responsibly—by maintaining low balances and making timely repayments—these can help establish a positive credit footprint, he adds.
Improving A Low Credit Score
Improving a low credit score is achievable through sustained financial discipline, says Jain. “The first step is identifying the root cause of the low score — be it missed repayments, reporting inaccuracies, or past defaults. Subsequently, key steps are improving repayment behaviour, reducing outstanding balances, and avoiding high credit utilisation,” he adds.
Monitoring Credit Reports
Jain states that regularly reviewing credit reports is equally important to monitor progress, and detect and rectify any discrepancies or unauthorised activities. With consistent effort and informed financial practices, individuals can build a strong credit profile and enhance their access to formal credit.
Some of the key factors that affect credit score are:
- Repayment History: Making loan and credit card payments on time is the most important factor, as delays or missed payments can have a negative impact.
- Credit Mix or Leverage: Maintaining a balanced mix of secured and unsecured loans, like a home or auto loan and a credit card, shows that you can handle different types of borrowing responsibly and make smart financial choices.
- Credit History Length: A long-standing credit history fosters trust with lenders, while frequently taking new credit within a short period may raise red flags and affect the score.