How to start building a credit history

There are some simple steps you can take to start building a credit history.

Open and manage a bank account

Setting up and using a current account will help build your credit history if you run it responsibly (e.g. making sure you have enough money in your account to cover your payments each month) because it will demonstrate that you can have a responsible, ongoing relationship with a bank.

Opening and managing a current account responsibly will help your credit rating even if the account doesn’t include an overdraft.

Set up some Direct Debits

Top tip

Always make sure you have enough money in your bank account to pay any bills being paid by Direct Debit.

Set up some regular Direct Debit payments to pay bills such as your gas and electricity or your home insurance or mobile phone.

Not only will this help you to avoid missed payments, buy you’ll probably get a discount for paying by Direct Debit.

Don’t miss payments

Make sure you pay all your bills on time, as a missed or late payment will count against you.

If the company has to go to court to get the money, then it will greatly affect your ability to get credit and it will remain on your file for some years.

Factors that could stop you from getting credit

Beyond your credit history, there are certain other things a lender will check when working out your credit score and deciding whether to lend.

Financial ties with other people?

Top tip

If you close a joint account, request a ‘notice of disassociation’ from the credit reference agency to stop your credit files from being linked.

If you are thinking of having a joint credit agreement (such as a loan or mortgage) with someone else, their credit rating could affect yours.

That’s because your credit file will be ‘linked’ to the other person’s and a lender can check their file as well as your own if you apply for credit.

For example, if they fail to make repayments on credit cards or other loans, it could make your credit rating worse.

That’s why it’s important to end financial links with ex-partners by closing any joint accounts you still have and contacting the credit reference agency to ask for a ‘notice of disassociation’ to stop your credit files from being linked.

Who works out your credit score?

There is not one single, definitive credit score that exists for you. Rather, it’s worked out by each individual lender.

So for example, two different banks might credit score in different ways depending on their policies on lending.

However, when you apply for credit they’ll usually check with one or more of the three main credit reference agencies in INDIA who joined CIBIL services :

  • Experian
  • Equifax
  • High Mark.

These agencies each compile credit information about individuals in INDIA.

Before you apply for credit for the first time, you might want to check your credit report is up to date and correct.

Loanyantra always guides and manages the loan for those who have a good credit score. So you can anytime apply loan via loanyantra to all the top lenders in India. And choose the best-fit product at the lowest ever interest rate with great offers round the clock.



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