First, Understand Why a Credit Score Matters
Before you take any steps, it's important to know what you're building. A credit score, like a CIBIL score in India, is a number between 300 and 900 that tells lenders how reliable you are with money. A high score (typically 750 or above) makes it easier
and cheaper to get approved for future loans, whether it's for a home, a car, or even a small personal loan for an emergency. Without any credit history, you are considered 'new to credit', which can make lenders hesitant to approve your applications. Starting early, even right after graduation, gives you a significant advantage in your financial journey.
Start with a Secured Credit Card
For someone without an income track record, a regular credit card is hard to get. The perfect starting point is a secured credit card. These cards are issued against a fixed deposit (FD) you place with the bank. The FD amount acts as collateral, which minimises the bank's risk and makes approval easy. The credit limit is usually a percentage of your FD, often around 85-90%. Use this card for small, regular purchases you would make anyway—like your monthly phone bill or a few online orders. The key is to use it and pay the bill in full every month. This responsible behaviour gets reported to credit bureaus and starts building your positive history.
Use 'Buy Now, Pay Later' (BNPL) Wisely
‘Buy Now, Pay Later’ services have become extremely popular and can be an entry point to credit. Many BNPL providers report your repayment activity to credit bureaus like CIBIL. If you make all your payments on time, it can help build a positive credit history, especially if you have no other credit products. However, this tool requires discipline. Because it feels so easy to use, it encourages impulse spending. Missed or late payments are reported and can seriously damage your score from the very beginning. If you use BNPL, treat it like a serious loan: buy only what you can afford and never miss a due date.
Become an Authorised User on a Family Member's Card
Another simple method is to become an authorised or add-on user on a parent's or another family member's credit card. The primary cardholder can request an additional card for you on their account. You get a card with your name on it, but the legal responsibility for paying the bill remains with the primary account holder. If the primary user has a long history of on-time payments and low credit utilisation, that positive history can be reflected on your credit report, giving you an instant boost. However, the reverse is also true: if they miss payments or have high balances, it could negatively impact your budding credit profile.
Take a Small Consumer Loan If Needed
If you need to buy an essential item like a new laptop or smartphone for your job, consider purchasing it with a small consumer durable loan or on EMI. These loans are often easier to get for individuals who are new to credit. Successfully paying off the EMIs on time is a structured way to demonstrate your repayment discipline to lenders. This creates a positive repayment record on your credit report, showing that you can handle debt responsibly over a fixed period. This is a strategic move, but it should only be done for a purchase you genuinely need and can comfortably afford.
Follow the Two Golden Rules: Pay on Time and Keep Usage Low
No matter which path you choose, two principles are non-negotiable. First, always pay your entire bill on time, every single time. Payment history is the single most important factor in your credit score. Second, maintain a low credit utilisation ratio (CUR). This is the percentage of your total credit limit that you use. For example, if your credit limit is ₹20,000, try to keep your outstanding balance below ₹6,000. Experts recommend keeping your CUR below 30% to show lenders you are not overly reliant on credit.
