May 14, 2025 · 10 mins read
Santosh Kumar
When one is applying for a loan, renting an apartment, or even buying a new phone plan, the credit score plays an important role in it. Better credit scores mean better interest rates, higher limits, and a lot more things to ensure the financial future.
The most common question is how to build credit if somebody is in the beginning or has a less-than-ideal credit history? However, if you know some tried and tested methods, you can build a credit score almost overnight.
Your credit score is a three-digit number used as a reflection of your creditworthiness. It is based upon your credit history in determining how likely you are, from the point of view of lenders, to pay back a loan. The range is between about 300 and 850-the higher your score, the better it is. A good credit score may:
1: Qualify for a better interest rate.
2: Improve chances of approval in the loan application.
3: Make rental and purchase easier.
4: Decrease insurance premium
In case you’re new to it or have poor credit, secured credit cards are a perfect option to begin building credit history. In essence, the cards require a cash deposit that serves as your limit. With less risk involved, the lender is most willing to approve you.
1. To make a secured card work for you:
2. Pay your complete balance every month
3. Keep your credit utilisation below 30%
4. Get a card that reports your credit activity to all three major credit bureaus
Read More:: How to get a 5 lakh loan without a CIBIL score
If you're looking for another great option for building credit score, especially if you're either just starting out, or poor credit needs rebuilding, here is another very effective option.
Here is how it works:
1: A trusted person (typically your spouse or a parent) adds you to their account
2: You get a card in your name, but you do not have to use it
3: Now, the payment history and credit utilisation shows up on your credit report
The best thing here is that you get to "inherit" their good credit behavior--allowing you to create a better credit profile without qualifying for your own card. The only caution I would have, is that you need to be sure that the primary card holder has good cash monitoring habits and credit scores.
Read More:: Benefits of 700 Credit Score
The best method to build credit scores is to pay bills on time. Any types of late payments can stay on a credit report for up to seven years, and the effect on one's credit score can be severe.
Staying on top of it can be done with the following:
1: Setting up auto-payments
2: Arranging calendar reminders
3: Making a monthly budget
Paying on time is the backbone of any method to build a credit score.
Read More:: How to Build Credit from Scratch
Now, the credit utilisation ratio is your credit usage divided by the total credit limit. Build a credit score properly by targeting to keep this ratio lower than 30%.
How to reduce credit utilisation:
1: Pay down balances early.
2: Make multiple payments in a given month.
3: Request a credit limit increase (do not start spending more)
This method is one of the quickest ways of boosting your credit.
Every credit application results in a hard inquiry on your report, which may temporarily lower your score. Too many applications within a short period appear risky to lenders.
To get credit score building responsibility:
1: Apply only if necessary.
2: Allow a couple of months between applications.
3: Try to build a clean track record with your current credit.
Read More:: How Does Foreclosure Affect Your CIBIL Score?
If you're looking for a great way to build your credit score quickly, asking for an increase in your credit limit is an option worth considering. When you increase your available credit, you also automatically lower your credit utilisation, assuming you spend the same amount.
Since utilisation accounts for about 30% of your score, this request can significantly impact you. That said, don't go requesting a credit limit increase without research. Be sure to prepare yourself first to improve the chance of approval.
Before you ask about a credit limit increase:
Have your credit card for at least six months: Credit card companies are more likely to approve requests from someone who has had the card for six months or longer, and therefore, has established a pattern of responsible use.
Keep a clean payment history: Having consistent, on-time payments is essential. Too many late payments and companies will be hesitant to increase your limit.
Show an increase in income - if you can: Higher income allows the issuer to feel confident in your ability to manage more credit.
If your request is approved, use the higher limit wisely: Don't think of this limit increase as a reason to spend, rather view it as a tool to continue building credit score by maintaining low utilisation and on-time payments as a much larger limit. This is a powerful step in mastering how to effectively build credit.
Read More:: Which Credit Score Do Banks Use in India?
Tracking your credit report is an important part of improving a credit score. This will help you track your progress or determine if an error is negatively affecting your score unbeknownst to you.
Here is how to monitor your credit score:
Pull your report from all three bureaus: You can obtain, for free, reports from all three bureaus through AnnualCreditReport.com (Experian, TransUnion, Equifax). Reviewing all three reports will ensure that no negative data has gone unnoticed.
Monitor for errors or inaccurate reporting: An incorrect account or late payment would adversely affect your score. Make sure to file a dispute very quickly with the bureau(s).
Set a reminder to check every 3-4 months: Set reminders to check, you will be more likely to find negative changes or fraud early. You will keep on track with your resolution to improve your credit score.
Use credit monitoring apps or tools: There are apps like Credit Karma or Experian that will keep you updated with reminders and explanations for improvement. They will inform you of hard inquiries or new accounts opened or suspicious activity in your name.
Consider how your behavior is influencing your scores: Checking often can help provide insight into how payment and credit use causes movements in both of your scores. This will provide you with the information necessary to change behavior and purposefully work to improve you credit.
Read More:: How to Make a Kisan Credit Card?
Knowing how to build credit is important, but knowing what not to do is equally important. Some mistakes can halt or hurt one's pursuit of building a credit score.
Avoid these common mistakes:
Missing a payment: Even a single late payment can stay on your report for 7 years. For someone who has never had credit before, it can do a significant amount of damage to their score.
Maxing out your credit cards: High credit utilisation ratios can entice lenders to assume you are in a financially difficult situation. Try to stay below 30% of your credit limit to help improve your credit score.
Closing old credit accounts too quickly: Length of credit history is one of the factors that is used to learn how to build credit. Old accounts only help your average age of accounts, thus help your score.
Too many applications for credit cards at once: Each application yields a hard inquiry, and each inquiry negatively affects your score. If you space out the number of applications you submit over several months can help with the damage.
Ignoring your credit report: Many people do not check their credit report until it is too late. Often, it is missing inaccurate information, errors, fraud, or forgotten about old accounts that silently hurt their credit.
Read More:: How to Settle Credit Card Debt?
The timeline for building credit can vary widely. Credit building is a marathon, not a sprint. Achieving a "good" credit score (700+ or more) takes time and consistent financial habits. What impacts the timeline?
1: For someone starting with zero, it can take anywhere from 3 to 6 months.If you are new to credit, a score will be generated after a few months of opening an account. Utilising a secured card and/or becoming an authorised user on a secured credit account might help expedite this timeframe.
2: If you are rebuilding damaged credit, it may take longer (6 months to several years). Recovery from a late payment or default takes time, and you must be patient rebuilding credit. You should focus on paying on time, lowering debt, and building positive habits.
3: If you want excellent credit (750+), expect to wait 1–2 years. To achieve excellent credit, you need a longer credit history and low credit utilisation. However, with great prescriptive planning and no major mistakes, you could build your credit score faster.
4: The consistency of your habits is more important than behaviours taken shortcuts. There are no overnight learning experiences on how credit works; rather, there are no quick fixes. There is no need to fall for the "quick-fixes" and instead to adhere to tried and true, consistent methods.
5: Your journey may differ based on your financial profile. Someone with a good income and little debt may move along quicker than someone with bad habits. Focus on your own process and avoid comparing yourself to others.
Read More:: What is the Use of CIBIL Score?
Typically, it takes 3 to 6 months of responsible credit use to establish a score, and about 6 months to a year to achieve a "good" score.
You can build credit without a credit card by using credit-builder loans, reporting rent or utility payments on someone else's credit card.
No, checking your credit score is considered a soft inquiry that does not harm your credit. It is good practice to check your credit score so you can track your progress.
The fastest way to improve your credit score is to pay all your bills on time, keep your credit utilisation low, and request a credit limit increase if you qualify for one.
No, applying for multiple credit cards will hinder your score because they will all count as a hard inquiry.
Download the app from PlayStore
