Establishing Credit for the First Time: A User’s Guide

Ready to embark on the journey of establishing credit for the very first time? Buckle up as we take you through the twists and turns of building your credit score from scratch.

Why Does Your Credit Score Matter?

Your three-digit Credit Score Online (ranging from 300 to 900) is your financial report card. Lenders use it to determine your creditworthiness. A higher credit score means you’ll have an easier time getting approved for loans, credit cards, and even better interest rates.

Getting Started – The Basics

Here’s the game plan, in bite-sized steps:

Become An Authorised User: Piggyback on someone else’s good credit by becoming an authorized user on their credit card. This can give your score a boost.
Apply For A Starter or Secured Credit Card: Start small with a credit card designed for beginners. A credit-builder card often has lower credit limits, making it easier to manage. A starter card might also be secured, meaning they require a deposit that acts as your credit limit. It’s a safe and gradual way to build your credit.
Pay On Time, Every Time: Use your credit card for small purchases and pay off the balance in full every month. Paying your bills on time showcases your reliability to creditors.

Small Steps, Big Results

Now, let’s talk about those tiny yet impactful actions that can boost your credit score:

Keep Credit Utilisation Low: Aim to use only around 30% of your credit limit so you don’t seem overly reliant on credit.
Mix It Up: Having a mix of credit types, like a credit card and a personal loan, can enhance your creditworthiness.
Regularly Check Your Credit Score: Keep a vigilant eye on your credit score checking for any errors or suspicious activities.

Remember, that patience is key and building credit takes time. Stay on top of your payments, resist the urge to open too many accounts at once, and don’t max out your credit cards. Also, consider tools like the Bajaj Finserv Credit Pass to help you proactively build your creditworthiness as you navigate the world of credit.