Starting a first job at 21 presents a key opportunity for young adults to begin establishing their creditworthiness. Experts emphasise responsible borrowing and disciplined repayment as essential strategies for creating a reliable credit record that can unlock better financial options in the future.
For a 21-year-old starting a first job, credit may feel like a concern for later, when a car purchase, flat rental or mortgage application moves from theory to reality. Yet the habits formed early often shape how easily lenders see a borrower as reliable. A strong credit record is built gradually, not by taking on debt for its own sake, but by showing that borrowing is handled consistently and within budget.
According to Paisabazaar chief executive Santosh Agarwal, a newcomer to credit can begin with a secured credit card backed by a fixed deposit or, if eligible, an entry-level unsecured card. The point is to use the card for ordinary spending and repay the full balance on time each month. That approach keeps utilisation low, which means using only a modest share of the available limit, and helps create a pattern of disciplined repayment rather than revolving debt.
Other routes can also help establish a history, but experts caution against borrowing simply to manufacture a score. Experian says becoming an authorised user on someone else’s account, opening a secured card, taking a credit-builder loan or using certain bill-reporting services can all add information to a credit file. CNBC Select notes that people with no credit history can often start generating a score after several months of responsible use, provided payments are made on time and balances stay manageable. Agarwal also said that if a first application is refused, repeated applications to multiple lenders are unwise; it is better to understand why the request was declined and then consider products designed for new-to-credit borrowers.
When borrowing is already needed for a planned purchase, consumer-durable loans, buy-now-pay-later plans or some short-term personal loans may also help build a record, provided repayments are affordable. Secured borrowing such as a gold loan or a loan against property can also create credit history, though those options carry their own risks and should only be used when there is a genuine need. The most practical strategy, advisers say, is simple: begin with one suitable product, avoid maxing out credit lines, limit new applications and pay every bill on time. Over time, those habits can open the door to better borrowing terms and a wider choice of financial products.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
