New-to-Credit? Here’s How to Maintain a Healthy CIBIL Score

Are you new to the world of credit? Building a good CIBIL score from the very beginning is crucial for your financial health. A high CIBIL score opens doors to better loan terms, credit card offers, and even rental approvals. But as someone with no prior credit history, how do you establish and maintain a good CIBIL score? In this article, we’ll guide you through the essential steps to build a strong credit profile, even if you’re starting from scratch.

Understanding CIBIL Scores

What is a CIBIL score?

Your CIBIL score is a three-digit number ranging from 300 to 900 that represents your creditworthiness. It is based on your credit history, including factors like payment behaviour, credit utilisation, and length of credit history. A score of 750 and above is generally considered a good CIBIL score.

Why is a good CIBIL score important?

A high CIBIL score signifies that you are a responsible borrower, making you an attractive candidate for lenders. It can help you:
• Qualify for loans and credit cards more easily
• Secure better interest rates and terms
• Get higher credit limits
• Rent apartments without difficulty

Building Credit as a New-to-Credit Borrower

Start with a secured credit card

Secured credit cards are an excellent way to build credit when you have no prior history. These cards require a fixed deposit as collateral, reducing the risk for lenders. Use your secured card regularly and pay off the balance in full each month to establish a positive payment history.

Become an authorised user

If you have a family member with a good credit history, consider becoming an

authorised user on their credit card. Their responsible credit behaviour will reflect positively on your credit report, helping you build a good CIBIL score.

Take a small personal loan

Taking a small personal loan and repaying it on time can help you establish a credit history. Look for lenders like Airtel Finance that offer personal loans tailored for new-to-credit borrowers. Make sure to understand the eligibility criteria, interest rates, and required documents before applying.

Maintaining a Good CIBIL Score

Pay bills on time

Your payment history is the most significant factor influencing your CIBIL score. Always

pay your credit card bills, loan EMIs, and other dues on time. Set up automatic payments or reminders to ensure you never miss a due date.

Keep credit utilisation low

Credit utilisation is the percentage of your available credit limit that you use. Aim to keep your credit utilisation below 30% to maintain a good CIBIL score. For example, if your credit card has a limit of ₹50,000, try to keep your balance below ₹15,000.

Monitor your credit report

Regularly check your credit report for errors or signs of fraud. You can access your credit report and CIBIL score for free on the Airtel Thanks app. If you find any discrepancies, dispute them immediately with CIBIL.

Avoid multiple credit inquiries

Each time you apply for credit, the lender makes a hard inquiry on your credit report, which can temporarily lower your CIBIL score. Avoid applying for multiple credit products within a short period. Research and compare options before applying to minimise hard inquiries.

Conclusion

Building and maintaining a good CIBIL score is essential for your financial well-being, even if you’re new to credit. By starting with secured credit options, becoming an authorised user, or taking a small personal loan, you can establish a positive credit history. Remember to pay your bills on time, keep credit utilisation low, monitor your credit report, and avoid multiple credit inquiries to maintain a high CIBIL score.

Take the first step towards building your credit health today. Explore personal loan options from Airtel Finance tailored for new-to-credit borrowers and start your journey towards a strong financial future.

FAQs:

1. How long does it take to build a good CIBIL score as a new-to-credit borrower?
   Building a good CIBIL score typically takes 6-12 months of responsible credit behaviour, such as timely payments and low credit utilisation.

2. Can I get a personal loan with no credit history?
   Yes, some lenders like Airtel Finance offer personal loans tailored for new-to-credit borrowers. However, you may face higher interest rates and lower loan amounts initially.

3. What is the minimum CIBIL score required for a personal loan?
   While requirements vary by lender, a CIBIL score of 750 or above is generally considered good for securing a personal loan with favourable terms.

4. How often should I check my CIBIL score?
   It’s recommended to check your CIBIL score at least once every three months to monitor your credit health and identify any potential issues early.

5. Will applying for a credit card hurt my CIBIL score?
   Applying for a credit card triggers a hard inquiry on your credit report, which can temporarily lower your CIBIL score by a few points. However, the impact is minimal if you have a good credit history and make timely payments.