How to Build Credit Score as a Student

• Start small with secured or student credit cards to build credit safely.

• Pay EMIs, card bills and utilities on time to avoid early score damage.

• Keep credit usage below 30% to show controlled borrowing habits.

• Avoid multiple credit applications to prevent unnecessary score drops.

• Monitor your credit report regularly to fix errors and track progress early.
   

Building a good credit score while you are a student matters because it makes future borrowing easier to access. This includes favourable interest rates on loans, premium credit cards, etc. However, students face struggles like lack of prior credit history, irregular income, unfamiliarity with credit terms, and chances of financial missteps as a beginner. 

Hence, if you are wondering how to establish credit as a student, it is better to start small. Use credit responsibly, pay instalments on time and keep your credit utilisation low. Monitor your score and avoid multiple loan or card applications. Seek guidance from a trusted advisor if you are unsure. These steps can help you build a reliable financial record for the future.

Here are simple strategies you can employ to build your credit score as a student:

Start with a Secured Credit Card

A secured credit card is a great way to begin building your credit profile. These cards are backed by a fixed deposit, making them low-risk for banks. Use it for small, manageable expenses, and always pay the bill in full and on time to establish a positive credit history. 

You can also opt for student credit cards which especially cater to those pursuing higher education and need a credit instrument to manage their expenses.

Pay Your Education Loan EMIs on Time

If you’ve taken an education loan, ensure to pay your EMIs on time. Consistent repayment boosts your credit score and builds a track record of financial responsibility, which lenders value highly.

Keep Credit Utilisation Low

Credit utilisation refers to how much of your credit limit you use. Aim to use less than 30% of your credit limit to show lenders that you’re not overly reliant on credit. For instance, if your limit is ₹50,000, try to spend no more than ₹15,000 at any given time.

Start Using an Add-on Credit Card

If a parent or sibling has a good credit history, you can request to be added as an authorised user on their card. This helps you benefit from their positive payment history, boosting your own credit score.

Pay All Bills on Time

On-time payments are the most significant factor in your credit score. This includes not just loan or credit card payments but also utility bills, phone bills, or any other recurring expenses.

Monitor Your Credit Report Regularly

Use free tools to check your credit score and report periodically. Look for inaccuracies, such as loans or credit cards that you didn’t apply for, and dispute any errors with the credit bureau.

Apply for Credit Responsibly

Avoid applying for multiple credit cards or loans in a short period. Each application results in a hard inquiry, which can lower your credit score. Instead, space out your applications and only apply for what you need.

Take Small Loans for Essential Purchases

Consider taking a small personal loan for necessary purchases like a laptop or study materials and repay it on time. This helps establish your creditworthiness without straining your finances.

Maintain Old Accounts

If you have an existing credit card, keep it open even if you no longer use it. A longer credit history positively impacts your score.

Avoid Overdrafting Bank Accounts

Always ensure your bank account has enough funds to cover standing auto-debit instructions for payments. Bounced payments can negatively affect your credit score.

Be Financially Disciplined

Create a budget to track your expenses and stick to it. Financial discipline helps avoid unnecessary borrowing and ensures you meet your financial obligations.

Building credit early is important for students because it establishes a track record of financial responsibility. This is essential for accessing future credit options at more favourable terms. 

Key Benefits of Building Credit Early

• Easier Access to Future Credit: 

A solid credit history and a strong CIBIL score (typically above 750) is a key indicator of creditworthiness for lenders. Starting early helps students get out of the ‘new to credit’ category when they need loans for major life milestones after graduation. Having a credit score at an early age can also help them secure education loans for higher studies, whether in India or abroad. 

• Better Loan Terms and Lower Interest Rates: 

A good credit score signals to lenders that you are a low-risk borrower. It can make you eligible for competitive interest rates, higher loan amounts, and better terms on education loans for higher studies or other forms of credit in future. This includes both unsecured and secured credit products (home loan, personal loan, etc.) 

• Faster Loan Approvals: 

With a strong credit profile, the loan approval process is often quicker and more seamless. Lenders may rely on your credit history to make informed loan approval decisions faster. 

• Higher Credit Limits: 

Responsible credit use from a young age can lead to higher credit limits on credit cards and other credit products in the future. This can provide more financial flexibility. 

• Enhanced Financial Stability: 

The process of managing credit as a student (e.g., timely bill payments, low credit utilisation) instills healthy money habits. This can help you build a strong sense of financial discipline that can prevent debt traps later in life. 

• Preparation for Emergencies: 

A good credit score can help you secure a financial safety net in future. It can make it easier and quicker to access funds at cheaper rates during unforeseen financial emergencies. 

By starting to build credit responsibly during their academic years, students can position themselves for lifelong financial success and self-reliance. 

To start building credit as a student, you can apply for an education loan and repay its EMIs on time. You may also apply for a student-friendly secured credit card or as an add-on cardholder on a relative’s credit card. As such, you usually need to provide the following documents: 

• Proof of Identity: 

A government-issued photo ID such as an Aadhaar Card, Passport, Voter ID, PAN Card, or Driving License. 

• Proof of Age: 

Any official document that states your full date of birth, such as your birth certificate, Voter ID, Aadhaar Card, 10th standard school certificate, or Passport. 

• Proof of Address: 

Documents like an Aadhaar Card, Voter ID, Passport, Ration Card, or utility bills (electricity/telephone bill) that provide your residential address. 

• Proof of Student Status: 

A valid student identity card, academic certificate, or an official admission/enrollment letter from your university or college. 

• Proof of Finances: 

While not typically required for students, if you have a stable job or income source, you may need to provide income documents like PAN Card, salary slips, bank statements, or ITR forms. 

• Other Documents: 

1. Photograph: Recent passport-sized color photographs. 

2. Academic Records: Copies of mark sheets or certificates from previous qualifying examinations (e.g., 10th and 12th grade) are usually required for an education loan.

3. Co-applicant/Guarantor Details: For secured or add-on credit cards, banks may require the ID proof, address proof, income proof, PAN details, and bank statements) of a parent or guardian who acts as a co-applicant or guarantor.

As a student, your available several credit options include student-specific or secured credit cards, add-on cards, educational loans, and even personal loans from select providers. These options are designed to help students manage expenses and build a credit history, even without a regular income. 

Credit Cards

These are the most common options for students looking to build credit history. 

Student-Specific Credit Cards: 

A few banks offer credit cards exclusively for students with minimal eligibility requirements and lower credit limits (typically ₹10,000 to ₹25,000).

• Pros: Help build credit score early, offer student-specific rewards/discounts, and require minimal documentation like a student ID and address proof. 

• Cons: Lower credit limits and limited availability from only a few banks.
   

Secured Credit Cards: 

These cards are issued against a fixed deposit (FD) that you open with the card provider, which acts as collateral. 

• Pros: Higher approval rate, as they pose lower risk to the bank, and a higher credit limit, usually up to 80-90% of the FD value. 

• Cons: Requires a sizable upfront deposit to open the FD, with minimum amounts ranging from ₹10,000 to ₹25,000, depending on the financial institution. 
   

Add-on (Supplementary) Cards: 

Parents or other family members can get a supplementary card on their existing credit card account for you. 

• Pros: The student gets a credit card to develop key credit practices and financial discipline, as the parents can set spending limits. 

• Cons: The credit history built belongs to the primary cardholder and not the student, unless they can be added as an authorised user on the card. 

Loan Options

Students are eligible for certain loans and can build credit by repaying them on time. 

Education Loans: 

Traditionally, education loans provide a formalised way to finance a full degree or specific courses, in India or abroad. 

• Pros: Lower interest rates compared to personal loans and potential tax benefits.

• Cons: Require more documentation and often a co-applicant (parent or guardian) with a stable income.
   

Personal Loans: 

Several NBFCs and digital lenders may offer low-ticket, short-term personal loans to students. 

• Pros: Quick approval and disbursal, minimal paperwork (student ID and address proof), and flexible repayment options. 

• Cons: May have higher interest rates than traditional bank loans and some may still require a co-applicant.

As a student, you can get your first credit score in as little as 3 to 6 months of consistent, responsible credit activity. This includes regularly using a secured credit card and making timely payments. While a score might appear quickly, building a good or excellent score takes longer, typically several months to a couple of years. This also depends on your habits, like paying on time and keeping balances low, and on the number of accounts you have. 

Tips to Build Credit Faster as a Student

• Open a Student Card: Get a student credit card or a secured card designed for beginners. 

• Pay On Time: Pay at least the minimum balance by the due date to build a positive history. 

• Keep Credit Utilisation Low: Use only a small portion of your credit limit, ideally under 30%. 

• Become an Authorised User: Get officially added to a parent's card for instant credit history. 

• Check Reports: Once available, monitor your credit report online for errors and actionable steps.

Provided below are some common things you should avoid as a student to build and maintain your credit score: 

Missing Payments

Late or missed payments can severely impact your credit score. Always ensure you pay at least the minimum due amount on time.

Overborrowing

Maxing out your credit card or taking on too many loans can lower your credit score. Stick to manageable limits.

Ignoring Your Credit Report

Not checking your credit report could mean missing errors that can negatively affect your score. Reviewing your reports also enables you to identify fraudulent activities if any.

Applying for Multiple Credit Cards

Too many credit inquiries in a short period can make you appear credit-hungry, lowering your score.

Closing Old Accounts

Closing old accounts can shorten your credit history, reduce your available credit, increase your credit utilisation, and harm your score.

Building a good credit score as a student takes financial discipline, planning, and a clear understanding of how credit works. Even small actions, such as paying bills on time, keeping your credit usage low, and tracking your credit report, can influence your score over time. 

Avoiding missed payments and unnecessary borrowing also helps prevent long-term setbacks. By starting early and staying consistent, you can gradually build a strong credit profile that supports your future goals and provides better financial opportunities.