How To Build Credit History from Scratch?

What is credit history?

Your credit history is a record of how much you have borrowed or repaid during your financial journey. The credit history is important for lenders as they use it to check your creditworthiness and determine if you are eligible for credit cards, personal loans, etc. But what if you don’t have any credit history? Worry not! With the right credit strategies, you can start building credit the right way.

In this guide, we will discuss how you can start building a credit history from scratch.

How to Start Building Credit

Apply for a Credit Card

A credit card is one of the most common financial products that can help you build a credit history. To apply for a credit card, you will need to provide the lender with your contact details, employment details, income proof, etc. Once you have received your credit card, make sure to use it responsibly by making small purchases and paying the balance in full and on time every month. If you do so and make timely repayments, it would demonstrate your ability to manage credit responsibly and help you establish a positive credit history.

Become an Authorised User

If you are new to credit and finance and don’t understand the process, then you can also ask a family member with a good credit score to add you as an authorised user on their credit card account. This way you would receive your own credit card where your family member will be the primary account holder. As the account activity is reported to credit bureaus, it would help you build a good credit history.

Apply for a Credit Builder Loan

One of the significant credit strategies is to apply for a credit builder loan. These credit builder loans are designed specifically to help those who do not have any credit history and wish to build one. With these loans, the lender would hold the loan amount in a savings account while you make monthly payments. Once you have paid off the loan, you receive the funds in your account. And the timely payments which you made would be reported to credit bureaus, thereby, boosting your credit score.

Pay Bills on Time

Credit and timely payments go hand in hand. This is because timely payments play a significant role in maintaining your credit score. Whether it is the payment of bills such as rent, utilities, or phone bills, make sure you clear dues on time so that it does not directly impact your credit score. Late or missed payments would be reported to credit agencies, eventually, affecting your credit.

Monitor Your Credit Report

Credit report

Banks and financial institutions always run a credit report check before approving your application for a personal loan, home renovation loan, etc. Hence, make sure to regularly monitor your credit report to ensure its accuracy. Also, identify any errors or fraudulent activity and report them on time. Reviewing your credit report allows you to address any discrepancies and maintain a healthy credit profile.

Keep Credit Utilisation Low

Credit utilisation refers to the percentage of your available credit that you are using. If you keep it low, usually below 30%, it shows lenders that you are not relying too heavily on credit and can manage your finances responsibly. You should also check your credit card balances and aim to keep them well below your credit limits.

So, these were some prominent credit strategies you can consider to build your credit history from scratch. However, you should keep in mind that building a credit history from scratch is a gradual process that requires patience and discipline.

Also Read: How Having Multiple Credit Cards Can Affect Your Credit Score?

At CASHe, we understand the importance of credit history in securing loans. So, to build your credit score, you can consider our loan options (personal loan, car loan, etc) which are designed to meet your needs. Whether it is for education, emergencies, or personal expenses, CASHe offers hassle-free loans with flexible repayment terms.

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CASHe Team Welcome to the CASHe blog, your trusted source for insightful articles on personal loans, credit lines, digital gold, finance, lifestyle, and more. Our team at CASHe is a dedicated group of writers, editors, and subject matter experts passionate about simplifying finance for our readers.


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