How to Generate a CIBIL Score for the First Time

A credit record is built when your borrowing and repayment activity is reported to credit bureaus such as TransUnion CIBIL. If you have little or no credit history, you can begin establishing a credit record by using suitable credit responsibly, making repayments on time, and managing your outstanding debt carefully. Over time, this activity contributes to your credit profile and CIBIL score, which lenders may consider along with factors such as income, existing financial obligations, and repayment capacity when assessing a credit application. 

Why You Might Have No CIBIL Score 

First-time borrowers may not have a CIBIL score because they have little or no credit history available for assessment. A CIBIL score is generated using information in an individual's credit report, including details of credit accounts and repayment behaviour. 

If you have not previously used a loan, credit card, or another credit product reported to CIBIL, there may not be enough credit information to generate a numerical score. In such cases, the credit report may indicate NH (No History) or NA (Not Available) instead of a score. 

Having no CIBIL score generally means that there is insufficient credit history to assess. As you begin using credit and build a repayment track record, sufficient information may become available for a CIBIL score to be generated. 

Ways to Build Your First CIBIL Score
 

Apply for an Entry-Level Unsecured Credit Card

If you have recently started earning, you may be eligible for an entry-level credit card, particularly from the bank where your salary is credited. Using the card responsibly and paying the outstanding balance on time can help you establish a credit history over time.

Finance a Consumer Durable Purchase through EMI

Purchasing items such as a mobile phone, laptop, or home appliance through an EMI plan offered by a consumer-durable financing company can also help you begin building a credit history. Since these loans are generally for smaller amounts and shorter repayment periods, they may be more accessible to first-time borrowers. Timely repayment of EMIs can contribute to building a positive credit record, which may support future credit applications.
 

How to Generate the CIBIL Score Online? A Step-by-Step Guide

You can check your CIBIL score online for free by following these steps: 

1. Visit our CIBIL score journey page. 
2. Enter your name, mobile number, and date of birth. 
3. Provide your PIN code, PAN, and email ID. 
4. Click on ‘Generate OTP’ and enter the OTP received on your registered mobile number. 
5. Once verified, view your CIBIL score instantly and click on ‘Download Now’ to download your detailed credit report.

Why do You Need to Establish Credit?

Establishing credit early is essential to achieve future financial milestones. A strong credit score is key to securing loans for a home, car, or other major purchases. Building a credit history and using the credit wisely at a young age can simplify your financial transactions in the future. Since credit history improves over time, starting early offers significant advantages.

Also Read: Different Types of Credit Scoring Models You Must Know

How Long It Takes to Generate a Score 

There is no fixed period within which every first-time borrower will receive a CIBIL score. Once you begin using a credit product, the lender reports your account and repayment information to TransUnion CIBIL. A numerical score can be generated when sufficient credit information becomes available under CIBIL’s scoring model. 

New-to-credit borrowers may initially see NH (No History) or NA (Not Available) if there is not enough information to generate a score. As lenders continue reporting account and repayment activity, your credit record develops, and a numerical score may subsequently become available. 

Lenders generally report updates periodically, so new account or repayment information may take some time to appear in your CIBIL report. 

How to Maintain a Healthy CIBIL Score After Building Credit History 

Once you begin building a credit history, the way you manage your loans and credit cards can influence your CIBIL score over time. Some habits that can help you maintain a healthy credit profile include: 

• Make repayments on time: Pay loan EMIs and credit card dues by their respective due dates. Late or missed payments can negatively affect your credit profile. 
• Keep credit utilisation under control: Avoid consistently using a large proportion of your available credit limit. Lower credit utilisation can indicate that you are managing available credit responsibly. 
• Apply for new credit selectively: Multiple loan or credit card applications within a short period can result in several lender enquiries and may affect your CIBIL score. 
• Build a consistent repayment history: Managing your credit accounts responsibly over time helps establish a longer credit track record. 
• Review your CIBIL report periodically: Checking your report can help you identify inaccurate information or unfamiliar accounts. Checking your own CIBIL score does not negatively affect the score. 
• Monitor joint or guaranteed accounts: If you are a co-borrower, joint account holder, or guarantor, missed repayments on such accounts can also affect your credit profile. 

Building a healthy credit profile generally takes time. Consistent repayment behaviour and careful use of credit can help strengthen your credit history.

What are the Ways to Start Building a Strong CIBIL Score?

It is best to start building credit scores early in your life. Understanding how credit score works, checking your CIBIL score regularly, and working towards increasing your credit score while you are young help you establish a strong foundation for future financial commitments, such as a housing loan.

Here are some ways in which you can start building a strong credit profile:

1. Apply for a Credit Card or Loan

The first step in establishing your credit history is to apply for a credit product. For instance, a secured credit card, backed by a fixed deposit, can be ideal for beginners. This way you can demonstrate responsible borrowing behaviour, which is essential for building a credit score.

2. Make Timely Repayments

Your payment history is one of the most important factors affecting your credit score. Ensure that you pay your credit card bills or loan EMIs before the due date. Setting up reminders or automating payments can help you stay consistent in repaying the credit.

3. Keep Credit Utilisation Low

Credit utilisation refers to the percentage of your available credit that you use. Aim to keep this below 30% as it indicates that you are not overly dependent on credit.

Also Read: Easy Ways to Maintain a Good Business Credit Score

The Best Ways to Start Building Credit From a Young Age

It is best to start building credit scores early in your life. Understanding how credit score works, checking your CIBIL score regularly and working towards increasing your credit score while you are young helps you transition to adulthood successfully. The credit history reflected on your CIBIL report can help you get your first Housing Loan and your first vehicle loan. A record of paying back on time is something that will reward you financially, in addition to having a card at your disposal. As a financially independent individual, you can use credit for making purchases and paying bills. This includes additional benefits such as getting a better rate for vehicle protection. A better credit score will play a major role in whether your loan applications are endorsed, in the future. It will likewise decide how high your loan fees will be and whether you are approached to pay extra security.

There are multiple ways of beginning to lay out a good credit track while you are still young:

1. Having your family members add you as a joint credit account holder is a basic starting point toward building a positive record as a purchaser. They can help you with minding the month-to-month declarations. Learning about the entire credit process, from making a charge to dealing with the bill, will help you with regulating credit well. This will help you when you deal with credit independently. 
2. If you don't have a co-signer, consider applying for a credit card alone. Use a portion of your credit to make purchases. If you use your credit carefully and pay back on time, your credit limit will likely increase.
3. You can add your one-time utility bill, cell phone bill and Netflix or other web-based feature instalments to your credit card. This can be particularly helpful for people who have scores under 680 or individuals who have what is thought of as a "slender document" of less than five credit accounts on their credit report.
4. Shop within your means using a credit card. By being financially prudent and making good choices, you will end up with a good credit track.

Also Read: Easy Ways to Maintain a Good Business Credit Score

Common Mistakes to Avoid 

As you begin building your credit history, certain borrowing habits can affect how your credit profile develops over time. Some common mistakes to avoid include: 

1. Missing Payment Due Dates 

Late or missed payments on credit cards and loan EMIs can negatively affect your CIBIL score. Your payment history is one of the key factors considered in the calculation of your score, so making repayments on time and in full can help you build a healthier credit profile. 

2. Using Too Much of Your Available Credit 

Consistently using a high proportion of your available credit limit can indicate greater dependence on credit. CIBIL recommends keeping credit utilisation low, as higher utilisation may make a borrower appear to carry greater credit risk. 

3. Applying for Multiple Credit Products Within a Short Period 

Each time you apply for a loan or credit card, the lender may access your CIBIL report, creating a credit enquiry. While an individual enquiry may have only a marginal impact, applying for credit too frequently within a short period can negatively affect your CIBIL score. It may also indicate frequent credit-seeking behaviour to lenders.

Final Words

Building a credit profile early is important for achieving financial milestones in future. A good credit score can help you secure favourable terms on loans or credit cards. Start by applying for a credit card, such as a secured credit card, making timely repayments, and maintaining low credit utilisation.

 Read More: Check Your CIBIL Score Free