Picture this: You’re at the threshold of independence, ready to conquer the world of adulthood. But as you navigate this exciting new chapter, there’s one vital aspect you can’t afford to overlook – building credit.

In India, where credit holds significant sway over financial opportunities, establishing a robust credit history is your passport to a myriad of possibilities, from securing loans to renting your dream home. But where do you begin? Fear not, for we’ve curated a comprehensive guide tailored specifically for young adults. So, are you ready to unlock the secrets of building credit from scratch? Let’s dive in:

Credit Building Tips for Young Adults How to Build Credit from Scratch

Understand the Basics of Credit:

Before diving into building credit, it’s crucial to understand what credit is and how it works. In simple terms, credit is the ability to borrow money or access goods or services with the understanding that you’ll pay for them later, often with interest. In India, credit is typically measured through credit scores provided by agencies like CIBIL (Credit Information Bureau India Limited), Experian, Equifax, etc.

Apply for a Secured Credit Card:

One of the easiest ways to start building credit is by applying for a secured credit card. Unlike regular credit cards, secured cards require a security deposit, which acts as collateral in case you default on payments. By using a secured credit card responsibly – making timely payments and keeping your credit utilization low – you can gradually build a positive credit history.

Explore Credit Builder Loans:

In India, some financial institutions offer credit builder loans designed specifically for individuals with no credit history or low credit scores. These loans work by lending you a small amount of money, which you repay in monthly installments. As you make timely payments, your credit score improves, demonstrating your creditworthiness to lenders.

Become an Authorized User:

If you have family members or close friends with established credit accounts, you can ask them to add you as an authorized user on their credit card. This allows you to piggyback off their good credit history, potentially giving your own credit score a boost. However, it’s essential to choose someone who manages their credit responsibly to avoid any negative impact on your credit.

Pay Your Bills on Time:

Whether it’s rent, utility bills, or mobile phone bills, paying your bills on time is crucial for building good credit. While these payments may not directly impact your credit score initially, many lenders in India consider your bill payment history when assessing your creditworthiness.

Credit Building Tips for Young Adults How to Build Credit from Scratch

Keep Your Credit Utilization Low:

Credit utilization refers to the percentage of your available credit that you’re using at any given time. To maintain a healthy credit score, aim to keep your credit utilization below 30%. This shows lenders that you’re not overly reliant on credit and can manage your finances responsibly.

Monitor Your Credit Report Regularly:

It’s essential to monitor your credit report regularly to ensure that all information is accurate and up-to-date. In India, you’re entitled to one free credit report per year from each credit bureau. Reviewing your credit report allows you to identify any errors or fraudulent activity and take steps to address them promptly.

Apply for a Credit Card with a Low Credit Limit:

If you’re eligible, consider applying for a credit card with a low credit limit. These cards are often easier to qualify for and can serve as a stepping stone to higher credit limits and better rewards in the future. Just be sure to use the card responsibly and make timely payments to avoid falling into debt.

Diversify Your Credit Mix:

Having a mix of different types of credit accounts can positively impact your credit score. Alongside credit cards and loans, consider diversifying with other types of credit, such as a personal loan or a vehicle loan. This demonstrates to lenders that you can manage various types of credit responsibly.

Avoid Opening Too Many Accounts Too Quickly:

While it’s essential to have a mix of credit accounts, avoid the temptation to open multiple accounts within a short period. Each time you apply for credit, it triggers a hard inquiry on your credit report, which can temporarily lower your credit score. Instead, focus on managing a few accounts well before considering additional ones.

Keep Old Accounts Open:

Closing old credit accounts may seem like a good idea, but it can actually harm your credit score, especially if they have a positive payment history. Keeping these accounts open and in good standing shows a longer credit history, which can positively impact your credit score over time.

Seek Professional Advice if Needed:

If you’re unsure about how to proceed or have specific questions about building credit in India, don’t hesitate to seek professional advice. Financial advisors or credit counselors can provide personalized guidance based on your individual circumstances and help you make informed decisions about managing your credit.


Building credit from scratch in India is a journey that requires patience, diligence, and strategic planning. By following the tips outlined in this guide, young adults and newcomers can lay the foundation for a solid credit history that opens doors to various financial opportunities.

From applying for secured credit cards to diversifying credit accounts and maintaining responsible financial habits, each step plays a crucial role in shaping your creditworthiness. Remember, building credit is not a sprint but a marathon, and with perseverance and discipline, you can gradually elevate your credit score and pave the way for a brighter financial future in India.

These tips are brought to you by expert Financial Planners at HappyWise Financial Services.

If you need any assistance in Financial Planning/Tax Planning or want to discuss your investment options, feel free to connect through Email or Whatsapp.

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