In India sustaining a high credit score is extremely important for applying for loans, credit cards and other credit instruments. A high credit score ensures that you are able to secure a loan at favorable interest rates and keep your financial security intact.
Now, debt such as personal loans and credit cards also helps build credit history, many Indians still prefer to avoid such associations and commitments. That is why it is important to understand how you can still improve your credit score, even if you have no debt.
This write up is dedicated towards discussing five simple steps you can follow to improve your credit score even without having no debt on yourself.
Expert views
On the question of improving credit score even without any debt, Mr. Kundan Shahi, Founder, Zavo, in an exclusive conversation withMintstated that, “You don’t need a big loan to build a strong credit score. Your credit score is more than a number, it’s your financial identity. It impacts everything from loan approvals and credit card limits to rentals and even job offers.”
“But what if you’ve never taken a loan? Would that leave you without a credit score forever? Not at all. There are smarter ways to get started. Begin with a secured credit card, or consider a small credit-builder loan. These are low-risk products, tailored for new-to-credit users. Even using BNPL services responsibly or paying your utility bills on time through platforms that report to credit bureaus can help.”
He further added that, “If you’re salaried, you may also qualify for an unsecured credit card. From there, three golden rules apply: never miss a payment, keep your credit utilisation under 30%, and avoid frequent hard enquiries. These simple habits can gradually build your credit profile.”
“According to CIBIL, nearly 30% of Indians aged 21–30 have a score below 650 not due to missed payments but simply due to a lack of credit history. Don’t let “no debt” translate into “no credibility”. Start early, stay disciplined, and let your credit score open financial doors.”
Steps to improve your credit score without any debt
1. Leverage and use secured credit cards
Secure credit cards are credit cards that are issued against fixed deposits. They are an excellent tool that can help you build, improve and boost your credit score. These are credit cards that function like traditional credit cards. Still, the overall risk involved with these cards is much lower than traditional credit cards as they are already ensured by fixed deposits unlike the traditional ones.
To build and improve your credit score with these cards ensure that you maintain a low credit utilisation ratio, preferably a figure below 30%. Along with the same, ensure that you make timely payments, so that your actions are able to influence your credit score in a positive way.
2. Focus on making payments on time
If possible, automate payments for services such as rent, utility services, electricity, water, telephone bills, mobile recharges etc., this simple step goes a long way to help you boost your credit score and ensures consistency.
3. Apply and opt for small loans
Applying for and taking small personal loans or secured loans such as gold loans and repaying them on time demonstrates financial discipline, integrity and commitment. This repayment history is a key factor in improving your credit score and boosting your creditworthiness post the settlement of your loan.
That is why for example, if an individual goes for a secure gold loan and consistently makes the repayments as per the stipulated date and time then this simple practice can also go a long way to help him in improving his credit score.
4. Regularly follow-up with your credit score
To identify errors and discrepancies you should regularly review your credit report. This is important because it will help you to quickly raise an alarm with the credit bureaus and the concerned authorities if there is something wrong with your credit profile.
In India, you can also access one free credit report annually from credit bureaus such as CIBIL, Equifax, CRIF High Mark and Experian. Now, promptly addressing and dealing with issues ensures your credit score reflects responsible financial behaviour.
5. Try maintaining old accounts
Getting away with and closing old bank accounts or credit lines can negatively impact your credit score by shortening your credit history. Keeping older accounts in active form can immensely boost your credit score as they contribute in the overall length of your credit history.
Now, when you have a pretty old credit card on which you have made repayments consistently for years together, then in such a case when you apply for a new loan or credit card then it becomes much easier for lenders to see how good a borrower you are. They will clearly understand that you are someone who can be trusted due to your long credit history and a record of making loan payments or EMI payments on time.
What is the significance of a strong credit score?
A credit score generally over 750+ is considered as a strong and reputable score. Such scores help in accessing better financial terms and products. That was with updated scoring models, rewarding responsible financial behaviour even those individuals without debt can achieve excellent scores by adopting these straightforward techniques.
Hence, by staying focused, proactive and disciplined you can build a solid financial profile without relying on traditional debt instruments.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
