3 easy ways to improve your credit score before applying for a personal loan
If you are wondering why your personal loan application keeps getting declined, or why you cannot get a loan at a low rate of interest? The secret could lie in your credit score, which, in all probability, is low. A credit score is a three-digit number that banks use to judge your financial reliability, PTI reported.
The good news is that even a few small steps can boost your score and unlock better personal loan offers.
If you are planning to apply for a personal loan online soon, these are the three straightforward actions that you can take to improve your credit profile.
Why bother improving your credit score?
A higher score equals better chances. A healthy score (upward of 700) improves eligibility and gets you access to more banks. Besides, top scores secure the lowest personal loan interest rate. With a strong score, the entire process from document checks to fund disbursal becomes much smoother.
These are the three steps to take
- Pay Bills & EMIs on time: Every time late or missed payments are among the top reasons for falling credit scores. Lenders check your repayment history to gauge reliability.
It is recommended to set up payment reminders or automate EMIs for loans, credit cards, and utilities. Even repaying the minimum due on your credit card is far better than missing a payment entirely. Consistent, on-time payments build a positive track record—boosting your score within months.
2. Reduce your credit card balances: High credit utilisation (using a large portion of your available credit limit) signals possible financial stress.
So, you should aim to keep your utilisation below 30 per cent of the total card limit. It is recommended to pay off large outstanding amounts, especially before your statement date.
You should avoid maxing out your cards, even if you plan to repay soon.
| Credit utilisation rate | Credit score impact |
|---|---|
| Under 30 per cent | Positive / Neutral |
| 30 percent –50 per cent | Some negative impact |
| Above 50 percent | Likely lowers your score |
Lenders prefer responsible usage, so it reassures them when you manage credit wisely.
3. Check your credit report: And fix any errors mistakes happen! A wrong entry, old closed account, or someone else’s default showing up on your report can all drag down your credit score unfairly.
Here’s what to do: Request a free copy of your credit report from all major bureaus (CIBIL, Experian, Equifax, CRIF High Mark) once a year.
Look for unknown loans, late payments you never missed, or incorrect personal info. Dispute any errors directly—most get resolved electronically within a month.
Bonus tips for that extra edge
Keep older credit accounts active to maintain a long, healthy credit history.
Avoid applying for many loans or credit cards in a short period; multiple “hard” inquiries can hurt your score. Consider a small secured loan or credit-builder product if your credit history is thin. Real-World Example: Imagine Amit, who plans to apply for a ₹2 lakh personal loan next month.
He checks his CIBIL score of 670. He sets auto-pay on his loans, pays down his credit card bills from 60% to 25% utilization, and discovers an error (old card marked as unpaid). In just six weeks, his score jumps by nearly 60 points, letting him qualify for a lower rate and faster sanction!
(Under an arrangement with NRDPL and PTI)
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards, and credit score. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
