First home on your mind? Here’s how to build a credit score that opens doors

We are often advised to build a strong financial foundation, and this foundation relies heavily on comprehensive financial education, which includes understanding saving behaviour, investment habits, and seeking credit at the right time. Yet, we are rarely given clear explanations of what terms like ‘credit’ and ‘debt’ truly mean, making them seem intimidating, especially for those just beginning their financial journey.

In India, traditionally, buying a house is considered a significant milestone in the financial journey and a marker of independence for an employed adult. While many young individuals today delay home loan applications, owning property remains a crucial financial goal. 

In the recent past, credit has become more widely available, but it brings with it responsibilities. Even though it is easier to access credit today, conditions such as varying interest rates, lending institutions requirements, and your personal credit report information remain important. That is why it is smart to know what a good credit report is and how to improve credit score, before you need it.

How to manage your credit history efficiently

In order to maintain a strong credit score, it is essential to demonstrate consistent and responsible repayment behaviour. Home loans, being large in amount (averaging around ₹35 lakhs) and long term (15 to 20 years), require lenders to conduct thorough due diligence. While income reflects your current ability to pay, credit score check, and credit history give insight into your long-term repayment behaviour and is indicative of your credit seeking behaviour. 

A good credit report shows lenders you are dependable. This positive track record boosts your score and makes it easier to access loans for major needs like purchasing property or starting a business.

If you’re wondering how to improve credit score, it starts with regular monitoring. Credit score checks can help you assess your financial standing and understand how to improve credit score. A few focused actions like paying bills on time, limiting credit utilisation, and avoiding unnecessary loan inquiries can go a long way in demonstrating how to improve credit history effectively.

With digital lending platforms and quick commerce options like “Buy Now, Pay Later”, many people fall into the habit of taking easy and fast credit. It is best to avoid frequent short-term, low-value loans, though convenient, repeatedly opting for such credit options can impact your score adversely.

Another commonly used form of credit is the credit card. While it is a simple and accessible credit tool, your usage is reported on your credit report as debt. Lenders closely assess your payment patterns and delays. A good way to improve credit score fast is by using a credit card responsibly. It offers a fixed credit limit and can strengthen your credit profile, but only if the total amount due is paid regularly. 

Falling into the “minimum amount due” trap leads to interest accumulation and may affect your credit score and history. Similarly, applying for multiple loans, even just to check eligibility, can be viewed by lenders, as a signal for ongoing liquidity concerns.

Disciplined behaviour leads to efficient home loan access

Practicing disciplined financial and credit behaviour puts you in the best position to secure favourable credit options, such as a better loan-to-value ratio, interest rate, and repayment tenure. You must monitor your credit health using consumer credit reports from credit bureaus. These allow you to track your credit score without being flagged as credit-seeking. At every stage of your credit journey, ensure full and timely repayment of all obligations, whether it is a credit card bill, education loan, or short-term borrowing. If you’re focused on how to improve credit score, consistency and informed choices are key.

How to improve credit score fast is a question with a clear answer: disciplined habits, minimal debt, and regular score monitoring.

Sunil Agithakaliya, Chief Operating Officer, CRIF High Mark