How to Generate Your CIBIL Score for First Time

The CIBIL score is like your financial identity. It helps lenders understand how creditworthy you are. Those who have high CIBIL scores get quicker loan approvals and better interest rates.
Through this blog, you will learn how to generate your first CIBIL score and improve it with best practices over time. You will also learn about the common myths and how to check your CIBIL score online.
 

What is a CIBIL Score and Why is it Important?

A CIBIL score is a 3-digit number ranging from 300 to 900. It shows your lenders how creditworthy you are by summarising your payment history on all loan and credit accounts. There is no need for worry if your score is higher than 750 (as it is considered excellent for creditworthiness).
CIBIL scores have a triple-layered importance:
1.    They determine your loan eligibility,
2.    They fetch you lower interest rates,
3.    They speed up the loan approval time.
Good CIBIL scores gain you access to better financial opportunities.

How to Create Cibil Score: Understanding the Basics

When you apply for a loan or credit and create 6 months of credit history, banks and NBFCs report this tradeline to create your first CIBIL score. The CIBIL algorithm calculates your score based on your repayment patterns and credit product usage.
The key factors impacting your credit score are:
●    Payment history
●    Credit Utilisation Ratio
●    Age of credit history
Without a credit history, CIBIL systems cannot calculate a score. If you want to generate a CIBIL score, you need to open a formal credit account and show responsible repayment and usage.

How to Generate Your CIBIL Score for the First Time

Your first CIBIL score will be created as soon as you initiate a credit activity reported by your banks. Use the following methods to generate a CIBIL score:
1.    Apply for a secured credit card against FDs.
2.    Take out a personal loan and practice timely repayments.
3.    Use EMI options to purchase consumer goods (like TV, washing machine, etc).
4.    Be consistent in paying the EMIs for at least 6 months.
Pro tip: Need to apply for a quick personal loan? Check your eligibility instantly with Hero Fincorp’s personal loan app.

Practical Ways to Build and Improve Your CIBIL Score from Scratch

Once you create your first credit account and learn how to create a CIBIL score, you need to focus on building it well:
●    Pay on time, every time. Payment history is a big determiner, so never miss a payment.
●    Keep the usage of your credit card below 30% to maintain low utilisation.
●    Build a good mix of credit by responsibly managing unsecured and secured credit.
●    Keep your old accounts open to maintain a long credit history.
These habits make your credit score strong and keep it high.

How to Check Your CIBIL Score Regularly?

After you generate my credit score, it is important to monitor it regularly. You receive one free CIBIL report every year from the website, but you can check your score frequently on other platforms like Hero Fincorp.
You can go to CIBIL, Experian, or Equifax directly to check your score, or download a personal banking app or FinTech platforms for real-time score monitoring.
Checking your credit score counts as a "soft inquiry" and does not hurt your score.

Common Myths About Creating and Building CIBIL Score
 

Some common myths may discourage you from creating your first CIBIL score. Beware of these misconceptions:
•    The score does not measure your income, only your payment discipline and creditworthiness. High income is not a prerequisite.
•    Checking your own score will not lower it – it is considered a soft inquiry and is harmless.
•    Closing old credit cards isn't recommended - it shortens your credit history and may hurt your score.
•    When creating your CIBIL score, focus on the facts and establish a disciplined financial behaviour.

Your Credit Journey Starts Right Here, Right Now

If you are a young professional who wishes to establish a good credit reputation, it is critical to master how to generate an excellent CIBIL score from the get-go. It teaches you financial discipline, helping you improve your credit score over time and secure better terms in the future.
To get started, apply for a quick-disbursal, fast-approval personal loan with Hero Fincorp to kickstart your CIBIL score journey. Visit the website to know more.

Frequently Asked Questions

1. What documents do I need for my first CIBIL score?

You need all the standard KYC documents like Aadhaar, PAN card, and address proof to apply for your first credit product.

2. Can I build a CIBIL score without a credit card?

Yes, instead of credit cards, you can use secured loans (like gold loans) or unsecured personal loans to get started.

3. Can multiple loans decrease my CIBIL score?

Yes, if you take out multiple loans in a short period of time, it results in “hard inquiries” which can temporarily lower your score slightly.

4. How often can I check my CIBIL score?

You get one free report per year from the official websites. With NBFCs and FinTech apps, you can get real-time CIBIL score monitoring.