The Essential Guide to Building Credit History from Scratch

The Answer to Building a Credit History from scratch

Your credit report and score are important when you want to buy a home, car, or get a loan. Lenders use this information to decide if you can be trusted to repay the loan. If you have never used credit before, it is important to start building a credit history. This will help you when you apply for a loan in the future. Here’s how to start building your credit history.

How to Build Credit with No Credit History?

1. Apply for a Credit Card

One way to begin establishing a credit history is to apply for a credit card. You can apply for a credit card online or in person at a bank. Credit cards area convenient and straightforward way to build and improve your credit score. There are two types of credit cards: unsecured and secured.

  • Secured credit cards

Secured credit cards are issued by credit card companies and banks in exchange for collateral. These cards are often given to borrowers who have little or no credit history, and using them responsibly can help improve credit scores. You can easily get a secured credit card against a fixed deposit and savings account at a bank

  • Unsecured credit cards

Unsecured credit cards are those that do not require any security or deposit to obtain.  They also have better offers and perks as compared to secured credit cards. Once approved, the borrower is given a credit limit to use for purchases, which can be paid back in full or in installments during the next billing cycle. However, these may require some credit history, to begin with. You may however get an unsecured credit card with a low credit limit based on your income and bank policies.

2. Use your Credit Card Regularly 

Establishing a positive credit history takes time and effort, so it is important to use your credit card regularly. This can include making purchases in person or online, as well as using your card for other transactions that will keep it active. If you already have a credit history, using your credit card responsibly on a regular basis can also help you maintain a healthy credit score. It is important to remember to pay your credit card bills on time and to keep your balances low in order to make the most of your credit card usage.

3. Get Added onto a Family Member’s Credit Card

One way to build credit without having a credit card of your own is by becoming an authorized user on someone else’s credit card. This means that you are able to use the card and make purchases, but the primary cardholder is ultimately responsible for paying the bills. To become an authorized user, you can ask a spouse, friend, or family member to add you to their credit card account. Be aware that your spending as an authorized user may impact the credit score of the primary cardholder, so it is important to use the card responsibly. Banks and issuers may be hesitant to issue unsecured credit cards to borrowers with no credit history, but being an authorized user on someone else’s card can be a way to build credit.

4. Take a Small Loan

Getting a small loan, such as a personal loan, education loan, or secured loan like a 2-wheeler loan, can help you begin your journey towards building a credit history. By making timely repayments on this loan, you can demonstrate to lenders that you are a responsible borrower and capable of handling credit. This, in turn, will make it easier for you to apply for larger loans in the future. A buy now pay later line of credit such as Paytm postpaid can also help in starting your credit journey.

5. Pay your Credit on Time

Your credit payments are a key part of your credit data, which is shared with credit bureaus to create your credit report and calculate your credit score. If you miss or are late on debt payments, it can hurt your credit score. To keep your credit score healthy, it is important to make sure you pay your bills on time. This means paying the full amount due each month and not missing any payments. By making timely payments, you can demonstrate to lenders that you are responsible with credit and are likely to be a good borrower.

In general, all of the suggestions above can be used to build a credit history in a year. Apart from that, it is best to contact your respective banks or credit card issuers to learn more about what is required to establish a credit history.


The answer to how to build a credit history is to be consistent in your credit purchases and timely repayment. Both responsible credit history and irresponsible credit behaviour can have an impact on your credit score. As you begin to build your credit history, make certain that you are not missing any opportunities to improve your credit score. Seek advice from experts to learn how to build your credit history and what steps must be taken to maintain it.


How quickly can you build a credit history?

According to Experian, it takes a minimum of three to six months of regular credit activity to establish a credit history that can be used to calculate a credit score. This means that using a credit card or taking out a loan and making timely payments on it for at least three to six months can help you build a credit history. It is important to note that establishing a credit history takes time, so it is important to be patient and use credit responsibly in order to build a strong foundation for your credit score.

How long does it take to build a 700 credit score history?

Rebuilding a damaged credit score can take a significant amount of time, typically six months to a year or more. During this time, it is important to focus on using credit responsibly and making all of your credit payments on time. This can help you demonstrate to lenders that you are capable of managing credit responsibly, which can improve your credit score over time. If you already have a good credit score, it is important to continue making timely credit payments in order to maintain your good credit and potentially improve it even further.

What types of bills contribute to credit history?

Paying loan EMIs and credit card bills on time and consistently can help you build a positive credit history and improve your credit score. By demonstrating that you are responsible with your financial obligations, you can show lenders that you are capable of managing credit responsibly, which can lead to a better credit score.

When should you begin building credit?

You can begin building your credit history at or before the age of 18 by using financial products such as loans and credit cards with legal documents and an authorised user account.

What is a secured credit card?

Secured credit cards are those that are issued in exchange for a deposit or collateral. These cards are issued by banks and credit card companies to people who have no credit history or are about to start one.

How can I improve my credit score?

To improve your credit score, make sure to pay your credit repayments on time, do not split any credit payment, use CUR (Credit Utilization Ratio) wisely, do not apply for multiple credit cards from different banks, etc.
You May Also Like