New Delhi. Even if you do not have a credit card, there is no need to worry. By taking the right steps, you can build a great credit score even without a card. Now the method of giving loan has changed. Banks and NBFCs now look at your overall financial behaviour, income and payment history to decide whether you are a trustworthy customer or not. In such a situation, it is absolutely possible to create a strong credit profile even without a card.
Let us know those easy and effective ways by which you can improve your score in 6 to 12 months, that too without any credit card.
1. Start with a small personal loan
Building a credit history can be started with a small loan. Take a small amount personal loan or secured loan (e.g. against fixed deposit) from a trusted bank or NBFC. This will start building your credit record. The most important thing is to repay every installment of the loan on time. Delay in payment or default brings down the score immediately. Take a small loan in the beginning so that the payment does not become a burden and the record looks strong.
2. Proper use of Buy Now, Pay Later and EMI schemes
If you do not have a credit card, then Buy Now Pay Later (BNPL) and EMI offers from e-commerce sites can be very useful. Sites like Amazon, Flipkart give you products on EMI or BNPL. When you pay every installment on time, your payment history is ready. This method gradually proves you to be a responsible borrower. Many BNPL services now provide data directly to credit agencies like CIBIL, meaning paying on time can increase your score, while being late can bring it down.
3. Pay all bills and rent on time
Many people think that paying electricity bill, mobile bill or rent has nothing to do with credit score, but now this thinking should be changed. Many fintech platforms send reports of your on-time bill payments to credit bureaus. This proves your payment behavior and has a positive impact on your score.
4. Have job stability and continuity of income
Your income and job stability also indirectly affect your credit score. When you work at one place for a long time and show regular salary, banks consider you a low-risk customer. This increases your chances of getting loans at lower interest rates in future.
5. Do not apply for loan or card again and again
Many people apply for multiple loans or credit cards simultaneously. By doing this every bank registers a hard inquiry in your credit report. If there are many such entries, the score starts falling and banks consider you credit-hungry i.e. seeking more loan than required. If one bank has rejected the application, do not immediately apply again to any other bank. First check the reason in your report.
6. Check your credit report once a year
There are 4 major credit bureaus in India – CIBIL, Experian, Equifax and CRIF High Mark. According to RBI rules, every person can get a free credit report once a year. Read this report carefully and if you find any mistake related to old loan, payment or wrong entry, get it rectified immediately.
7. Be patient, improvement will appear gradually
Credit score does not increase overnight. If you consistently make your payments on time and have no new defaults, your score can gradually reach 750+. This is a long haul game. Consistency and discipline are the biggest weapons.
When will the effect be visible?
If you regularly pay loan or bill installments on time, your credit score will improve in 6 to 12 months. Gradually you will become a responsible borrower, which will help in getting easy and cheap loans in future.
