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Banks and financial institutions lend money in the form of car loan, home loan, automobile loan etc or in the form of products like credit cards. In order to determine the eligibility of all applicants and check their creditworthiness, financial institutions resort to checking the credit history of the applicant and requesting for their current credit report. This report helps them understand the past payment history of the applicant, and applicants with a good credit score i.e., 750 and above enjoy quicker approvals, competitive interest rates, etc.

Right from checking your credit report to applying for a credit card and from using minimum credit card limit to clearing past dues, many such factors play a vital role in building a good credit score and maintaining it. Ideally, a CIBIL score of 750 or more is considered by most banks and financial institutions. Anything below this could create trouble for the applicant.

Tips to Start Building Your Credit History

An established credit history is a proven ability to clear dues on or before time. However, if an individual has never taken any type of a loan or owned a credit card then there would be no established credit history or any kind of credit history check that can convince current banks or lenders of their creditworthiness. For first timers like these, here are some tips on how to build your credit history and create creditworthiness for the future.

  • Review your current credit report: Know your current credit status and understand your credit report in detail. The credit report will help you decide what steps are to be taken ahead and how to start building on your credit score. Lower your current credit score, harder you must work on improving it.

  • Clear your past dues: Check for pending payments and clear your past dues at the earliest as they might be impacting your credit score as well as accruing interest. The longer you wait to clear these dues, the more you will end up paying in accrued interest and fine or late fees.

  • Start small: Building a credit score takes time and consistent effort, which is why it is crucial to start by applying for a card with a small credit limit, or take a small loan in the beginning, as per your needs. It is not advisable to have too many bank accounts or apply for multiple credit cards right from the get-go.

  • Apply for a beginner or basic credit card: Once you have started online banking and operating your bank account routinely, apply for a basic or a beginner’s credit card. While this card may not have a lot of rewards and perks, it helps the user get acquainted with the credit card billing cycle, annual and joining charges, penalty fees levied for late payments etc.

  • Keep a tab on your credit card expenses: While most people insist on getting higher limits for their credit card to manage their expenses, it is important to know that you must spend as little of your monthly credit limit as possible. Ideally, a cardholder must spend up to 30% of their monthly credit limit or go up to a maximum of 50%, to maintain a good credit history.

  • Make timely payments: Remembering the due dates of your credit card bills is very vital. Additionally, not only is it important to pay on or before time but also to pay in full. As a best practice, you must follow the ‘pay full bill amount’ strategy if you wish to improve your credit score, and not just the minimum amount.

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Benefits of Having a Good Credit History

Take a look at some of the benefits that you can enjoy if you maintain a good credit history and consistently work towards improving it:

  • Enjoy low interest rates on loan applications and credit cards.

  • Good credit history can improve chances of getting credit card or loan approvals from banks and other financial institutions.

  • Getting a higher credit card limit or higher loan amount sanctioned becomes easier with a good CIBIL history check.

  • Enjoy better rates for insurance policies and easier rental apartment approval.

  • Overall, it is possible for you to negotiate on the interest rate with banking representatives if you have a very good credit history i.e., credit score of 750 and above.


It is crucial to have a strong credit history because that will prove useful in the future, when you want to apply for a loan, purchase a new credit card etc. Be it renting an apartment, applying for insurance or even looking for a job overseas, your CIBIL score history can impact many such major decisions. Hence, take your credit history check in your own hands from early on and be in charge of improving your CIBIL score as well as maintaining it. 

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