Why a 750+ Score Matters
A credit score is a three-digit number, typically between 300 and 900, that tells lenders how reliable you are with credit. In India, credit bureaus like CIBIL, Experian, and others calculate this score based on your financial habits. While a score of
700 is considered good, aiming for 750 or higher places you in the 'excellent' category. A score in this range significantly increases your chances of getting approved for home loans, car loans, and premium credit cards. More importantly, it gives you the power to negotiate lower interest rates, which can save you a substantial amount of money over the long term. Lenders see you as a low-risk borrower, opening doors to better financial products and opportunities.
Start with a Secured Credit Card
For many young adults with no credit history, getting a regular credit card is a challenge. A secured credit card is the perfect entry point. These cards are issued against a Fixed Deposit (FD) that you open with the bank. The FD amount acts as collateral and your credit limit is usually a percentage of that deposit. By using the card for small, regular purchases and paying the bill in full each month, you start building a positive repayment history. Banks report this disciplined behaviour to credit bureaus, laying a strong foundation for your score. Many banks like SBI, Axis Bank, and Kotak Mahindra Bank offer secured cards designed for beginners.
The Golden Rule: Pay Bills on Time
Your payment history is the single most important factor affecting your credit score, accounting for a significant portion of its calculation. Consistently paying all your bills on time, every single time, is non-negotiable for a healthy score. This includes credit card bills, loan EMIs, and even 'Buy Now, Pay Later' services. Late payments, even by a day, can negatively impact your score and remain on your report for years. To avoid missing due dates, set up automatic payments or reminders for all your recurring bills. Always aim to pay the full outstanding balance, not just the minimum amount due, to avoid interest charges and show financial discipline.
Keep Your Credit Utilisation Low
Your credit utilisation ratio is the percentage of your total available credit that you are using. For example, if your credit card limit is ₹50,000 and your outstanding balance is ₹15,000, your utilisation ratio is 30%. Financial experts recommend keeping this ratio below 30% at all times. A high utilisation ratio can signal to lenders that you are overly dependent on credit, which can lower your score. To manage this, you can spread your expenses across multiple cards, pay down your balance before the statement is generated, or request a credit limit increase after demonstrating responsible usage for some time.
Be Smart About New Credit Applications
Every time you apply for a new loan or credit card, the lender performs a 'hard inquiry' on your credit report, which can temporarily lower your score by a few points. Applying for multiple credit products in a short period can make you appear 'credit hungry' to lenders and hurt your score more significantly. It's wise to space out your credit applications by at least a few months. Only apply for credit that you genuinely need. This demonstrates a thoughtful and disciplined approach to borrowing, which is a key trait of a creditworthy individual.
Regularly Review Your Credit Report
Errors on your credit report, such as incorrect personal details or accounts that don't belong to you, can unfairly drag down your score. In India, you are entitled to one free credit report from each of the major credit bureaus every year. Make it a habit to check your report from bureaus like CIBIL periodically. Review it carefully for any inaccuracies and dispute them immediately. Regularly monitoring your report not only helps in correcting errors but also allows you to track your progress and understand the impact of your financial habits.
