CHECK YOUR FREE CREDIT SCORE

How to build a credit score from scratch?

08-April-2015 written by : FSI-Team

A credit score is a numerical score that summarizes each individual’s credit history, that is, how much money he or she obtained as a loan and whether the credit has been repaid or not etc. If you are applying for a loan, be it education loan, home loan, business loan or any kinds of loan, the credit lender will check your credit score and credit report, so that they can understand how able you are to borrow and repay the money. If they are satisfied with the credit reports, then only will they grant you the loan.

Some people may wonder how to get credit score. The answer is in fact uncomplicated; if you ever have taken a loan or have a credit card or bought products on EMI, then you must have a credit history and credit score.

Who does not have a Credit score?

  • Most young people, just 18 or so, do not have credit cards or loan history. They use their parents’ credit cards if required. Therefore, they don’t have any credit history.
  • Most young people, just 18 or so, do not have credit cards or loan history. They use their parents’ credit cards if required. Therefore, they don’t have any credit history.
  • The credit bureau will have no credit record for this person and therefore he or she will not possess any credit score.
  • More and more people have been enquiring about the process to wipe away the debts yet it still creates impact on your credit score.

How to get credit score?

If you are one of those people, who matches the above mentioned criteria then you have to follow certain steps to get a credit life which will spawn the credit score under your name.

  • Issue for a credit card from the bank of your selection. Once you get hold of the credit card under your name thereafter start using it frequently. The reports of monthly usages are sent to the credit bureau by the creditors and the bureau will start a credit file under your name and record the payment habit that your credit card suggests.
  • It takes almost 6 months of regular use to make enough information to get a credit score. This method is the best one to build a credit file and generate a credit score.
  • Be an authorized user of a good account that may belong to your parents, spouse or anybody. This way you can take advantage of the credit history of the account to which you have been accredited as the authorized user.
  • Make credit cards from those banks which reports to two of all the credit bureaus. Many smaller financial organizations do not do that.
  • Don’t keep your credit cards unused. To generate a credit score, the credit card has to be updated within the last 6 months.
  • Once in a month, use your credit card to pay for something that may be the grocery shopping or paying for dinner, anything small will do just fine to keep the credit card and credit score active.
  • Obtain a secured/unsecured loan if need be, and make the payments on time.
  • Based on the unavailability of credit history or poor score, if the bank is not willing to issue a card; then get a prepaid credit card issued and create positive records as you go forward.

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