Jun 18, 2023Investments

How to Build a Strong Credit Profile for First-Time and Second-Time Home Buyers

by Godrej Properties Limited



Introduction to Credit Profile

Understanding Your Credit Score

Before diving into the steps, let's first understand the basics of a credit score. Your credit score is a numerical representation of your creditworthiness and is based on factors such as your payment history, credit utilisation, length of credit history, types of credit accounts, and recent credit inquiries. 

Steps to Build a Strong Credit Profile

1. Establish Credit

If you're a first-time homebuyer with no credit history, it's essential to establish credit. Start by applying for a credit card or a small loan. Consider options like a secured credit card, which requires a deposit as collateral. 

2. Pay Bills on Time

One of the most important aspects of developing a healthy credit record is consistently paying your obligations on time. Late payments might have a negative impact on your credit score. Set up reminders or automated payments to avoid missing payments.

3. Maintain Low Credit Utilisation

Credit utilisation guides to the portion of your available credit that you're currently using. Aim to keep your credit utilisation below 30% of your total available credit limit. 

4. Keep Credit Accounts Open

Closing credit accounts may seem like a good idea, but it can harm your credit profile. The length of credit history is an important factor in calculating your credit score. 

5. Limit New Credit Applications

Avoid applying for multiple credit cards or loans within a short period. Each credit application results in a hard inquiry on your credit report, which can temporarily lower your credit score. 

Additional Tips for Building Credit

1. Monitor Your Credit Report

Regularly review your credit report to ensure accuracy and identify any errors. Dispute any inaccuracies promptly to prevent them from negatively impacting your credit profile.

2. Diversify Your Credit Mix

You should have a mix of various types of credit accounts, like loans, credit cards, and a mortgage, can positively impact your credit profile. However, be cautious and only take on credit that you can manage responsibly.

3. Be Patient

Building a strong credit profile takes time and consistent effort. It's a long-term process, so be patient and stay committed to responsible credit management.


Building a strong credit profile is vital for first-time and second-time homebuyers in India. A strong credit profile increases your chances of securing a favourable mortgage with lower interest rates and better terms. By following the steps outlined in this article, such as establishing credit, paying bills on time, maintaining low credit utilisation, and being mindful of new credit applications, you can build a strong credit profile and set yourself up for success in your home-buying journey.

Frequently Asked Questions

1. How often should I check my credit report?

Ans: It's recommended to check your credit report at least once a year to ensure its accuracy and identify any errors. 

2. Is it necessary to have a credit card to build credit?

Ans: While having a credit card can help build credit, it's not the only option

Previous Post
Next Post