How does a Line of Credit help in building your credit score?

How does a Line of Credit help in building your credit score?

27 January 2024 | By INDIE

Credit score plays a central role in getting various loans and credit products. Based on your credit score, a financial institution or credit union decides your creditworthiness and approves or rejects your loan application. Revolving credit such as a credit card or a line of credit can be a suitable option if you are looking to build or improve your credit score as it is affordable and easy to manage.  Let’s unravel how a line of credit can be a game-changer in building your credit score and strengthening your financial standing.

Why is credit score important?

Your credit score is a numerical representation of your creditworthiness which reflects your credit history and financial habits. This score is used to evaluate the risk of lending money to you. A high credit score opens doors to favourable interest rates and increased borrowing capacity. Whether you are eyeing that dream home or planning a business venture, a robust credit score is crucial during loan applications.

How does a line of credit relate to credit score?

A line of credit is a flexible financial tool that allows you to borrow funds up to a predetermined limit. Unlike traditional loans, you only pay interest on the amount you use. Now, you may wonder how this relates to your credit score. Well, the way you manage your line of credit significantly influences your credit score. Timely repaying your outstanding amounts can impact your score positively and improve it. On the other hand, in cases of defaults and late payments, it can degrade your CIBIL score.  

How does a line of credit help you build your credit score?

There are several ways in which a line of credit helps build and improve credit scores:

1. Credit utilisation ratio management: Your credit utilisation ratio is the amount of credit you are using compared to your total credit limit. A lower ratio is favourable. With a line of credit, you have the flexibility to manage and optimise this ratio which positively impacts your credit score.

2. Timely repayments: Regular and timely repayments on your line of credit demonstrate financial responsibility. Each on-time payment contributes to a positive credit history, reinforcing your creditworthiness.

3. Diverse credit mix: Credit scoring models consider the types of credit you have. A mix of credit, including a line of credit, shows your ability to manage different types of credit, reflecting financial responsibility, which enhances your overall credit profile.

4. Credit age: The age of your credit accounts is also a factor in your credit score. By responsibly managing a line of credit over time, you contribute to the length of your credit history, positively impacting your credit score.

5. Credit discipline: The disciplined use of a credit line reflects your financial discipline. As you resist maxing out your credit limit and make timely repayments, you cultivate habits that strengthen your creditworthiness.

Benefits of a line of credit from IndusInd Bank’s INDIE App

1. Accessible anytime, anywhere: The INDIE app's line of credit is at your fingertips and provides instant access to funds of up to ₹5 lakh anywhere and anytime you need it. This convenience ensures that you can manage your finances on the go, making responsible credit management a seamless part of your lifestyle.

2. Competitive interest rates: The INDIE app offers competitive interest rates on its line of credit, ensuring that you can borrow smartly without accumulating exorbitant interest costs. This affordability is a key factor in maintaining a positive credit history.

3. Convenient repayments: Repay your used credit at your convenience. Choose a tenure between 3 months to 36 months as per your ease and repayment capabilities. 


Your credit score is an important aspect that banks and financial institutions consider when you apply for a line of credit or any loan. Maintaining a good credit score can increase your chances of loan approvals at affordable rates. A line of credit is convenient to manage and cost-effective and can help you build a robust credit score and meet your financial needs with confidence.

The cutting-edge INDIE app from IndusInd Bank goes beyond conventional banking and offers a line of credit that not only meets your financial needs but also acts as a strategic tool to elevate your credit score. By embracing responsible borrowing and leveraging the benefits of INDIE’s line of credit, you pave the way for a brighter financial future. Build your credit score wisely and let INDIE be your trusted companion on this journey. Apply today!

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.