How to Build a Credit Score from No Score?

Last Updated : Feb. 13, 2025, 5:25 p.m.

A credit score is a very essential parameter that lenders check before approving your loan application. It is done to evaluate your creditworthiness and understand how responsibly you have handled your finances. So, what will happen if you have never availed credit and have a credit score of zero. Let us now understand how these people with Nil credit score or zero credit score are evaluated when they apply for credit. Also let us find out how to build your credit score from zero or scratch.

What Will Happen When You Do Not Have a Credit Score?

‘New to credit borrowers’ are those individuals who have never availed any credit in the past and are not availing any credit at present as well. These applicants have no credit history and may be eligible only for a few entry level credit cards and credit builder loans. First time borrowers may find it difficult to get the best loan or credit card offers, since they will need excellent credit history.

Useful Tips to Build your Credit Score from Scratch

Even if you do not have a credit score at present, it is not impossible to build one. Here are some tips to get started.

Apply for a Secured Credit Card

You can apply for a secured credit card to build your credit score from scratch. A secured credit card is one which is taken against a fixed deposit. The credit limit of the card equals the value of the cash deposit. Secured credit cards can be obtained easily even when you do not have a credit score or a credit history as they are given with a security deposit or collateral as backup. Once you obtain a secured credit card, repay the bills properly on time.

Apply for a credit builder Loan

Credit builder loans can be obtained easily. No credit check is required. It is most suitable for customers with low credit scores, no credit history, or who are finding it difficult to get a secured loan. The credit builder loan is the most suitable for borrowers who

• Are looking for a new line of credit
• Desire to build their credit history and credit score
• Have no credit history and credit score
• Want to clear existing loan advances

Repay the dues of your credit builder loan on time to build a good credit history.

Choose the Buy Now Pay Later Option

BNPL is becoming very popular, and it is a user-friendly method using which customers can make purchases instantly and then pay later. You can pay for the purchases in equated monthly installments over a specified duration. By paying your EMIs on time, you can build a good credit score.

Include Your Name in an Add on Card

Ask a family member or a friend with a credit card to add you as an authorized user. Their excellent credit history will help in enhancing your score. Before you become an add on card member, ensure that the primary member uses his credit card responsibly and pays his credit card bills without defaulting.

Apply for a Consumer Durable Loan

With the help of a consumer durable loan, you can buy household and office products such as electronics, furniture, home appliances, and a lot more. New to credit customers can take this loan and make the repayments on time. This will help them in building a good credit score as repayments are reported to the credit bureaus by the card issuers.

Apply for Credit Products from a Known Bank

Customers can opt for a bank with which they have an existing financial association such as a salaried account, savings account, current account, etc. If they already have a good relationship and financial position with the bank, then the loan or credit card is approved with ease. This is because the lending bank is already aware of your financial history and position.

After you have built your credit score, how do you maintain it? Let us read on to find out

Some Useful Tips to Maintain your Credit Score

Pay Your Bills on Time

Lenders report the consumer credit information to credit bureaus regularly. Using this data, credit bureaus create credit reports of consumers. Hence, it is essential to pay your loan EMIs and credit card bills on time. This can help you show as a responsible consumer and credit responsible in the eyes of the lender. This will help in improving your CIBIL score .

Do not Apply for Multiple Credit Within a Short Duration

Applying for multiple credit products in a short duration of time can result in a decline in your credit score. Each time you apply for a credit product a hard inquiry is triggered. Multiple hard inquiries will harm the credit score you are trying to build. So, give a break of at least 6 months between applications. Applying for credit frequently represents credit hungry behavior. Lenders hesitate to sanction credit to you as they find you a high risk borrower who may not be able to pay your loans on time.

Have a Low Credit Utilization

Credit utilization ratio or CUR is the ratio of used credit limit to the total credit limit available. Having a low credit utilization ratio is crucial and it is important to monitor it. It shows how judiciously you have handled the assigned credit limit. A high credit utilization ratio shows you as over dependent on credit but a low credit utilization ratio shows that you are less dependent on credit and can manage it wisely. The credit utilization ratio makes up to 30% of your credit score. Hence, the lower it is, the higher is your credit score.

Monitor your Credit Report Regularly

It is essential to monitor your credit report regularly. Sometimes, there could be a dip in your credit score due to errors in your credit report. Errors can be due to wrong personal and account information, duplicate accounts, active accounts which are not in your name due to identity theft, etc. By checking your credit report from time to time, you will be able to identify the discrepancies that bring down your credit score. You can then raise a dispute with one of the credit bureaus and get the errors rectified.

You can check your credit score and report for free on the official portal of wishfin. You can also see the detailed CIBIL report by logging in . Wishfin also provides a credit health app which you can download from Google Play Store or Apple Store to check your CIBIL score.