No CIBIL Score? Here's How to Generate, Build, and Check Your Credit Score

A credit score represents the creditworthiness of a borrower. It helps lenders determine whether a borrower is capable of repaying the debt. Most banks and financial institutions check a person’s credit or CIBIL score as a first step before approving any loan or credit application. The higher your score, the more likely you are to get a loan.

Table of content

• What is CIBIL Score and Why Does it Matter?
• How to Generate Your CIBIL Score?
• Tips to Build a Strong Credit Score
• How to Check Your CIBIL Score?

However, what happens when you have never taken a loan or used a credit card? In such cases, the lender may find no credit history associated with your name and will most likely come up with an NH (No Hit). The unavailability of a credit score is most likely to discourage the lender from approving your loan.

So, how do you build a credit score from scratch? Let’s find out!

What is CIBIL Score and Why Does it Matter?

A CIBIL score is a three-digit number that reflects your creditworthiness based on your credit history. A CIBIL score starts from 300 and goes up to 900, with a score above 750 considered good.

Before we talk about how to make a credit score, here are some benefits of building a credit score:

• Easy approval of loans
• Eligibility for credit cards with better rewards and benefits
• Lower Interest rates
• Higher loan amount or credit card limits
• Better repayment terms

How to Generate Your CIBIL Score?

Wondering “how to generate my credit score?” Here are some effective ways:

Apply for a Secured Credit Card

A great way to build your credit score is by getting a credit card against a fixed deposit, commonly known as a secured credit card. Normally, a 750 or above CIBIL score is required for a credit card, but a secured credit card, which is backed by a fixed deposit, can be obtained even with a lower score. The fixed deposit acts as collateral in case the borrower defaults on payments.

Apply for a Consumer Durable Loan

Another way to create a credit history is to take a small consumer durable loan that can be repaid easily. A consumer durable loan allows you to purchase electronic products, home or office appliances, furniture, and much more.

Opt for the Buy Now Pay Later (BNPL) Option

Buy Now Pay Later (BNPL) is a popular trend among consumers nowadays, allowing them to purchase from any e-commerce site and pay later. If you opt for the pay later option, the will be considered as a credit facility and reported to the credit bureau, thus helping you build your credit score.

Suggested Read: Different Credit Score Ranges and What They Mean

Tips to Build a Strong Credit Score

Now that you know how to start a CIBIL score, it is time to maintain it. Here are some tips to build a strong credit score:

Make Timely Payments

Paying your credit bills on time is a good credit behaviour that can impact your credit score positively. So be sure to pay not just the minimum dues but the entire bill amount. To ensure that you don’t miss any payments, set automatic payments or reminders.

Keep Credit Utilisation Low

Credit utilisation score is the amount of credit you're using compared to your total credit limit. Ideally, a ratio below 30%-40% is required to maintain a healthy ratio. A low utilisation score shows that although you are new to credit cards, you are being cautious and are not overspending.

Avoid Multiple Credit Applications

While the eagerness to start building a credit history soon is understandable, applying for credit cards or loans at multiple places will only do you more harm than good. This is because each time you apply for a loan or credit, an inquiry is placed that ultimately hurts your credit score. So, make sure you apply for a loan only when required.

Monitor Your Credit Report

Checking your credit report regularly is a good habit that can help you get ahead in life and save you both time and money. Monitoring your credit profile regularly allows you to be informed about any changes made to your credit, such as new accounts being opened in your name, an overdue payment reported by one of your creditors, or a credit card balance increase.

How to Check Your CIBIL Score?

Here is how you can check your CIBIL score regularly:

• Visit the official website of CIBIL.
• Create an account or log in with your existing credentials.
• Fill the form by entering your details such as name, PAN card number, date of birth, and contact information.
• Verify your identity by completing the OTP verification sent to your mobile or email.
• Once verified, you can view and download your CIBIL score and credit report.

As we conclude, it is clear that building a credit score does not come easily. However, by remaining consistent and following the steps discussed in this blog, we are sure you can create your credit footprint and become credit-worthy.

To check CIBIL score online for free, consider visiting Muthoot Finance's official website. There you can find a detailed process of checking the CIBIL score and much more.