6 reasons why first-time borrowers find it tough to maintain a healthy credit score

Your first experience with credit may feel like a milestone, but it brings real responsibility that many underestimate. Building a strong credit score isn’t instant; it requires disciplined, timely repayments and responsible borrowing over time. Without these habits, early mistakes can harm long-term financial health, underscoring the importance of credit awareness for stability.

Understanding these basics, including credit score and credit profile, is essential before exploring how they impact your financial future.

What is a credit score?

A credit score is a three-digit number. It reflects an individual's creditworthiness. This score ranges from 300 to 900 and is provided by leading credit bureaus such as CRIF High Mark, Equifax, Experian, and TransUnion CIBIL.

Furthermore, any score above 750 is considered excellent and helps secure better loan terms and easier repayment terms. This makes it critical for individuals to maintain a strong credit score and a clean credit profile, without any missed payments or defaults.

What experts say

Anand Agrawal, Co-founder of FixMyScore & Credgenics, says, “First-time borrowers enter the credit ecosystem with thin files but high exposure to easy digital credit. Frequent small-ticket loans, high utilisation, and missed or delayed repayments, often driven by poor understanding of score mechanics, create early stress signals. Without structured guidance, these initial behaviours can anchor long-term credit vulnerability and limit future access.”

Keeping these concepts and fundamentals in mind, here are six reasons why new first-time borrowers struggle to maintain a healthy credit score.

Why first-time borrowers struggle to maintain healthy credit score

1. Lack of credit awareness: Most of the first time borrowers do not understand the concept of credit. Borrowing comes with associated factors such as repayment potential, the importance of credit mix, and current credit utilisation. These factors must be clearly understood before you submit any new credit application. This will ensure that you are aware of what you are signing up for. Without this understanding, errors can take place.
2. High credit utilisation: When you avail a new credit card, the company provides you with a ‘credit limit’. This limit, when utilised improperly, can result in you using a large portion of the permitted credit limit, and such behaviour is a clear red flag. New borrowers, due to factors such as festive spending and emotion-driven decision-making, often max out their credit cards, unaware that high credit utilisation can negatively affect their scores.
3. Irregular repayments: Even a single missed credit card payment, personal loan EMI or home loan EMI can seriously damage your credit profile. This fundamental concept must be clearly understood by all first-time borrowers. The rule is simple: Borrow only as much as you can repay comfortably. Don’t borrow beyond your means.
4. Overdependence on ‘easy digital loans’ online: This is yet another dangerous myth. No loans are easy. The rise of instant loan applications naturally encourages frequent borrowing. The UI platforms of these applications are designed to encourage people to consider borrowing. This way, when funds are borrowed recklessly, several small loans can quickly add up, creating repayment pressure and score volatility.
5. Short credit history: A limited credit history cannot project an individual as a responsible borrower. This makes it harder for lending institutions to analyse and assess creditworthiness. Early mistakes weigh more heavily when there is little data to refute this reality.
6. Lack of financial planning: Proper personal finance planning is a soft skill. It needs patience, devotion and continuous knowledge building to learn this skill. In such cases, impulse borrowing without a clear repayment plan leads to debt cycles and financial complications. This happens more often than not, as first-time borrowers generally borrow based on comfort and convenience rather than affordability.

In short, building and maintaining a neat credit profile and a high credit score is not automatic. It requires devotion, informed decision-making and consistent financial discipline over months and years.

Before you opt for a new form of credit, it is always prudent to consult a certified financial advisor, who can guide you towards sustainable borrowing habits and long-term economic prosperity and stability.

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