How to improve credit score without debt?

Let me give you the answer straight away. There is no way one can build or improve credit score without debt.

Though there is a small compromise possible.

But I will disclose it at the end of this article.

But before that allow me to share my concept about “credit score” first.

I know, you started to read this blog post for a possible solution on declining credit score.

But the writer here is raising his hands…What you can do?

Do not leave the page yet. Read further…

Possibly, this blog post has potential to change your life forever.

If you think I am boasting, please read till the end. You will know.

At least you will learn a new point of view.

It is a rare “point of view”. But people who are “financially independent“, preach it.

If you aspire to attain financial freedom in life, this blog post can be your first guide.

But why I am talking about financial independence instead of “Credit Score”?

Digging around the theory of Credit Score..

“Financial independence” and “Credit Score” are like north and south poles.

They do not compliment each other.

Let me show you how…

Given an opportunity, you will choose to do what among the following:

  1. Improve your credit score? or
  2. Become financially independent?

The answer is obvious. None of us want to live like “slaves”.

It is best to get out of the rat-race and lead a financially independent life.

Do you know the reason why people act like slaves?

Because we lead a wrong way of life, called “paycheck to paycheck life“.

What makes us live this way? Our debt burden.

Why we carry this burden? Because we have not learnt the other way.

Always carrying some kind of debt behind us has become natural.

Debt is no longer a bad thing. Everybody has it, so its good?

This is the reason why, we seek knowledge about things that can fetch us more debt “easily”.

Having a high credit score (800+) is one such “thing”.

Why we are more curious to improve our credit score?

Because we THINK, we will need debt very soon.

Why we do not ask questions related to financial independence?

A person who is subconsciously planning to “avail debt” cannot think about financial independence.

Debt and financial independence cannot go hand in hand.

Who needs credit score?

Simple, people who need debt. Period.

Why debt is required? Because enough fund is not available to manage the priority.

Why enough fund is not available? Because one did not “plan” for it.

Financial planning; this is that thing which we have not not learnt since our childhood.

Today our thought process is like this…

Why to do financial planning if we can afford to pay the loan EMI…

This thought process has killed generations….

Who propagates & market the “concept of debt”?

Banks. They make tonnes of money for themselves by making us believe that “availing debt is not bad”.

But in reality, availing debt hints at our “past mistake”. No planning.

A simple example, that will prove if debt is good or bad.

Good companies rely on debt to do business? Never.

Do you know what good companies have that we don’t? Brains.

Finance of good companies are managed by MBA’s of IIMA’s alumnus. They are financial genius.

But who runs our personal finance? We, with our ignorance.

This is why we are curious about “credit score” and not about “financial independence”.

I know it may be sounding harsh, but sometimes it is better to face our demons head-on.

What our credit score say about us?

Nothing that we should care about.

They do not tell how well we earn money.

They do not say how secured or unsecured is our income?

Least they know what is our net worth.

All they say about us is, “how well we managed our debt in the past”.

The more debt we had, the better it is for credit rating companies.

They see the following behaviour in us:

  • How many debts we have.
  • Have we ever defaulted on our debt.
  • How punctual we were in debt repayment.
  • How much of credit-limit we utilised in our credit card.
  • …and blah-blah-blah…

Credit score is all about how we “handle” debt.

Do you think “Mark Zuckerberg” worries about his FICO scores (CIBIL in India)? No.

Why? He does not need debt.

He has a “BIG investment portfolio” to take care of his priorities.

Who needs a debt? People who do not earn high? No.

These are the three types of people who need debt:

  1. People who did no financial planning.
  2. People who overspend.
  3. Unlucky people.

So, could you see a link between “Credit Score” & “financial illiteracy”?

Do not worry about “how to improve your credit score”.

Worry more about how to become debt free.

But no debt means no Credit Score?

Yes, this is a fact.

In CIBIL’s language, a debt free person will have a Zero Credit Score.

But a debt free person do not care about this “Zero rating”. Why?

Because the truth is, credit rating of a debt free person is undefinable.

Remember this school math, X dividend by Zero = ∞ (infinity).

Let me give you a simple puzzle.

Raj and Ram (aged 25 years) earns Rs.100,000 per month.

Raj has a debt. He pays an EMI of Rs.35,000 per month.

Ram is debt free.

  • Who is going to have a higher credit score?
  • Whose purchasing power is better?
  • Whom “you” will prefer to give loan?

Raj will have a better credit score as he has debt. Ram will have a credit score of zero.

Purchasing power of Ram is better. He has more free cash in his hand.

I would prefer to give loan to Ram instead of Raj.

But who will not get loan from bank? Ram will not get loan (zero credit score).

Do you see the fallacy in our credit-scoring system?

They treat being-in-debt as a good thing. What is their justification?

They say, “they do no have record of debt free people.” Hence they cannot predict the behaviour of such people.

This is foolish analysis.

If Mukesh Ambani has not taken any personal loan, it means his debt repayment credibility is zero? This man has personal net worth of $41.7Billion.

How to improve credit score without debt?

Efforts to improve credit score is not worth it.

But if you still insist on it, here is a simple compromise.

Go and get a credit card.

Technically speaking, any amount spent using credit card will be counted as your debt.

But you will not be charged a dime of interest during its “credit free period”.

So you can safely assume that “you are debt free”.

But let me caution you; carrying credit card is like playing with fire.

One must have good self-control while handling credit card.

My quick tip on handling credit card is as below:

  1. Do no consume more than 10% of your credit limit.
  2. Pay the credit card bill the day you receive it.
  3. Do not carry credit card always in your purse.
  4. Never allow online portals to remember your card details.
  5. Never forget rule 1 (10% credit limit).


One cannot improve credit score without debt. The best compromise will be to get a credit card.

But one must remember that, in fact having a “high credit score” is not necessary.

Focusing on improving ones credit score is like looking on the “wrong side of the road”.

Which is the right side?

I hope this blog post has given you some alternative thoughts.

Ponder over it. Discuss it with your friends and colleagues.

Then, share your idea here in the comment section below.

Wish you a debt free life.

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Hi. I’m Mani, I’m an Engineering graduate who in pursuit of financial independence, has converted into a full time blogger. After working in the corporate world for almost 16+ years, I bid it more

Disclaimer: The information provided in my articles and products are for informational purposes only and should not be considered as financial or investment advice. Read more.

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