Credit scores in 2026: Expert explains what quietly hurts your score

Some habits can quietly damage your credit score. Here's what to watch

In India’s expanding credit market, how people use loans and credit cards now plays a decisive role in shaping their financial choices. Credit scores influence loan approvals, interest rates, and even eligibility for certain financial products. Many borrowers, however, become aware of this only after an application is turned down.

 

According to Manish Shara, co-founder and chief executive officer at fintech platform ZET, a healthy credit score is not built through one-time actions. “It is the result of small, consistent habits followed over time,” he said, adding that lenders are relying more heavily on credit data to assess borrower risk as 2026 begins.

 

 

Paying on time remains the most important factor

Shara said payment history continues to have the biggest impact on credit scores. Even a short delay in paying an EMI or credit card bill can be recorded on a credit report and affect the score for months. For people with a short credit history, the impact can be more pronounced.

 

He advised borrowers to use reminders or auto-debit instructions to avoid missing due dates, as regular and timely payments signal reliability to lenders beyond income levels.

 

Keep credit utilisation low

Credit utilisation, or the share of available credit being used, is another key factor lenders track. Shara noted that using a large portion of the credit limit may raise concerns even if payments are made on time, as it can indicate over-reliance on credit.

 

He said keeping overall utilisation below 30 per cent of the total credit limit is widely seen as a sign of responsible credit behaviour.

 

Avoid making minimum payments a routine

Minimum dues are designed to prevent default, not to manage debt sustainably. Shara cautioned that paying only the minimum amount every month increases interest costs and may weaken a borrower’s credit profile.

 

Paying the full outstanding credit card bill, he said, helps keep debt under control and demonstrates financial discipline over the long term.

 

Apply for credit only when necessary

 

Each loan or credit card application leads to a hard enquiry on the credit report. Shara says that several inquiries in a short span can signal financial stress, particularly for borrowers with limited credit histories.

 

He recommended applying for credit only when required and spacing out applications to maintain a healthier credit profile.

 

Do not close old credit accounts casually

The length of credit history plays an important role in credit scoring. Shara said older credit cards show how long a borrower has managed credit responsibly.

 

Keeping such accounts active can support credit health, unless there are high fees or security risks involved.

 

Credit health improves with consistency

 

Shara emphasised that credit scores do not improve overnight. They strengthen through consistent behaviour such as paying on time, keeping balances low, and using credit carefully.

 

As these habits carry into 2026, he said they can quietly influence how easily borrowers access credit and the cost at which it is available. Treating credit as a long-term responsibility rather than a short-term solution puts individuals in a stronger financial position over time.