No Credit History? Here is How You Can Build One

Are you one of those who have never applied for a credit card or loan? If yes, then most likely you do not have a credit history. If you’re just starting with your credit journey and need guidance to build it the right way, we’re here to help.

A good credit score is a key to get a wide spectrum of credit cards and quick loan approvals. But to open the line of credit, you need to build a credit history the right way. Here are a few tips that will help you build a good credit history from start.

Top 7 Tips to Build and Improve your Credit Score

1) Apply for a Credit Card

Most lenders and credit card companies hesitate to lend money to people without a credit history. This is because your credit history is the only way they can assess whether you will repay the loan amount on time or not. Therefore, to build credit, you must use credit.

Now the most important question that arises is without lenders willing to give you credit, how can you build credit? Luckily, there are a few ways you can use to overcome this issue.

One of the most common financial products that can help you begin your credit journey is a credit card. Applying for a credit card is the easiest and the most common way to build your credit score on your own. There are two types of credit card that you can apply for – secured and unsecured.

Unsecured Credit Card

The unsecured credit card is the best option to build your credit score, but beginners usually cannot avail it due to no credit score history. Unsecured credit cards, unlike secured credit cards, don’t require collateral or security. To get an unsecured credit, applicant must have substantial and good credit history along with sufficient income that demonstrates his/her credit worthiness. If you’re earning, you can try applying for an unsecured credit card. If you get it, start building your credit score from it else move to the next type of credit card, which you can avail without trouble.

Secured Credit Card

The secured credit card is another type of credit card that you can avail of if lenders are not paying any heed to your unsecured credit card application. Those who are not earning and also are new to credit must straightaway apply for a secured credit card as they are not eligible for an unsecured credit card. Credit newbies can easily access secured credit cards as they are given against a security amount or collateral. In most banks, the security is usually in the form of a fixed deposit.

You can compare and apply for a credit card online here to find the right card for you, as per your requirements, eligibility and expenditure.

2) Become an Authorised User

This is yet another way to build credit score by using an unsecured credit card. We have already said in the above point that people with no credit experience cannot get an unsecured credit card. However, they can still build their credit score through it by becoming an authorised user of someone else’s credit card. If your spouse or any other family member is using a credit card, you can request them to make you the card’s authorised user. Since you’re new to credit, you must be very careful about how you are using it especially when you’re an authorised user as a single slip up will directly impact the credit score of the person whose credit card you’re using.

3) Avoid Applying for Multiple Credit Cards at Once

Every time you apply for a credit card, it impacts your credit score. Therefore, try to avoid applying for numerous credit cards all at once as to lenders you will come off as a credit-hungry person. Also, there is no point to chip away your credit score that you’re trying to build up. Instead of applying for credit card at multiple banks, use the one you have to demonstrate that you can handle credit efficiently. Always keep the balance low and pay the bill full and on time.

4) Use Credit Card Regularly

People don’t get credit score from credit bureaus either because they are new to credit or their credit history is negligible for bureaus to even consider. If you want to build a healthy credit score, make sure you use your credit card regularly. Since, it takes time to build a healthy credit score, regular use of credit card while ensuring their timely repayments will help you build a good credit history. It is advisable to use your credit card at least once in a month at shopping stores, restaurants, or other things to keep your credit card active. This tip is useful not only for those who have an established credit history but also for those who want to build one. Therefore, it is advisable to use your credit card atleast once in a month.

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5) Monitor Credit Utilisation Ratio

Your credit card comes with a credit limit (the maximum amount that credit card lenders allow borrowers to spend). When you start using a credit card, credit bureaus consider the credit utilisation ratio to determine your credit score. Also known as balance-to-limit ratio, it is the proportion of the credit limit and the amount you have spent using a credit card.

Monitoring this ratio is important as it shows how well you manage the credit available to you. If you don’t want to give an impression of a credit-hungry person, try to limit your credit utilization ratio within 30%–40% of your total credit limit. Even though a CUR of 60-70% has almost no impact on your score, but maxing out your card frequently or having CUR 90-100% on a regular basis portray you as a credit hungry person and may impact your score negatively.

Periodically, lenders report your credit data to credit bureaus, which is then considered to prepare your credit report and calculate your credit score. The credit bureaus have not revealed the weightage given to different credit parameters, however, the debt repayment history is considered most influential. Therefore, miss or delay in making one or more loan or credit card instalments can harm your credit score drastically. Ensuring full and timely payments will help you build a healthy credit score in no time.

It usually takes a minimum of six months of regular use of credit card to create enough information for credit bureaus to generate a credit report. To ensure lenders give you secured credit card for use, build a good credit history for a year as this much time should be enough to demonstrate that you’re good at managing your finances. It is important to shift from secured credit card to unsecured credit card as the later frees you from security or collateral obligation. Also, an unsecured credit card offers better credit limit and perks.


Credit history is not built in a day. It may take six months or even a year depending on how well and often you use and handle credit. To build an impressive credit score, it takes even more time. If you want to reach the excellent credit score range and then maintain it, just keep working towards it. Perseverance is the key mantra to achieve and maintain a good credit score.

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