How Can Students Build Their Credit Scores Without Income Proof?

Having a strong credit score is essential for availing credit cards and loans in the future. But achieving a high credit score requires a good credit history and building that history requires access to credit, which students usually struggle to get due to lack of income proof. So how can students begin their financial journey? Read on to find out.

Having a strong credit score is essential for availing credit cards and loans in the future. But achieving a high...Read more

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4.5_/5

15.6L Reviews

5.7Cr+Satisfied Customers

4Bureau Coverage

800+Cities across India

Why Check Credit Score on Paisabazaar ?

Check Credit Score from All 4 Bureaus

Track Credit Score Seamlessly Every Month

Read Credit Report in Multiple Languages

Ways Students Can Start Building Their Credit Scores Without Income Proof

If you are a student and want to build your credit score from scratch, here is what you need to do:

1. Get a secured credit card

Students without income proof cannot get a regular credit card. However, they can get a secured credit card. Students having fixed deposits (FDs) in their name can avail a credit card against it. These cards are easier to obtain than unsecured or regular credit cards, as the deposit reduces the risk of card issuer. The credit limit of such cards is usually 90-100% of the FD amount. If you use your card responsibly and pay its bills by their due dates, you will be able to build a good credit score.

2. Consider availing a consumer durable loan

A consumer durable loan is a great way to purchase household appliances on easy EMIs while simultaneously building your credit history from scratch. These loans are easier to avail for students who are new-to-credit. By ensuring responsible usage and making all your repayments on time, you can effectively build a strong credit score.

3. Buy Now Pay Later

Using Buy Now Pay Later services, students can start building their credit history even without a regular income source. These platforms allow users to make purchases and repay the amount later in installments. If the lender reports repayment behaviour to credit bureaus and the student has paid their installments on time, it can positively contribute towards building a good credit score.

How Long Does It Take to Build a Credit Score?

Building a credit history takes time and requires responsible credit management. Once you start using a credit product, such as a secured card or consumer loan, your repayment behaviour is reported to credit bureaus like TransUnion CIBIL, Experian, Equifax and CRIF High Mark. These bureaus track your credit activity and use the data to determine your credit score.

Generally, it takes around 3 to 6 months of consistent credit usage for your first credit score to be generated. So, it is important to use your credit wisely by paying your dues on time and keeping your credit utilisation ratio low to build a good credit score.

Common Mistakes Students Should Avoid When Building Their Credit Scores

When starting your financial journey, there is a high chance of making certain errors that could negatively impact your credit score. Knowing these mistakes beforehand can help you avoid them.

Missing a Credit Card Bill Payment
Missing even a single credit card bill payment significantly reduces your credit score as lenders report it as a late payment to credit bureaus. To avoid such a case, set an auto-pay to automatically debit the monthly dues by their due dates.

Frequently Maxing Out Your Credit Card

Maxing out your credit card means using almost all or the entire credit limit that is available to you. When this happens frequently, it signals high credit dependence to your lender. Even if you pay your credit card bills full and on time, having a consistently high credit utilisation ratio in your report can negatively impact your credit score.

Making Multiple Credit Applications Within a Short Span

Having multiple credit enquiries (or hard enquiries) in your credit report within a short span suggests financial instability and credit hunger, which can reduce your credit score.

Monitor Your Credit Report Regularly

Once you start building your credit history, it becomes important to keep track of your credit score. Reviewing your credit report helps you identify inaccuracies or unauthorised entries early and correct any errors by reporting them to the lender or bureau.

You can download a free credit report once in a year from each of the major credit bureaus. However, checking your credit score from Paisabazaar can be a better alternative. Here, you can:

check your credit score from all 4 credit bureaus at one place
track your credit score seamlessly every month
get pre-approved personal loan and credit card offers from leading banks/NBFCs
avail personalized credit advisory to understand your credit report & improve your score.

How to Check CIBIL Score for Free with Paisabazaar?

Step 1: Enter your mobile number in the application form

Step 2: Provide your personal details

Step 3: Enter OTP to verify your mobile number

Step 4: Select the credit score purpose and credit score amount

Apply Now

How to Check CIBIL Score for Free with Paisabazaar?

Step 1: Enter your mobile number in the application form

Step 2: Provide your personal details

Step 3: Enter OTP to verify your mobile number

Step 4: Select the credit score purpose and credit score amount

Apply Now

FAQs

Can I switch from a secured credit card to an unsecured credit card?

Yes, after successfully building a positive credit score using a secured credit card, you can apply for unsecured cards. However, please note that approval depends on various factors and the bank’s internal policies.

How long does it take to build credit history?

It takes several months for new-to-credit individuals to build credit history.

How does an FD-backed credit card work?

A secured credit card can be obtained by opening a fixed deposit, where the amount in your FD typically becomes your credit limit.