How To Improve Your Credit Score For Instant Loan Approval?

When you apply for a personal loan, the lender will assess your credit score as a key factor. Your credit score is a three-digit number that gives an idea of your past credit history and whether or not you are able to manage your debt. The higher your credit score is, the faster you are likely to get a loan approved and also benefit from lower interest rates. Even those with less-than-perfect credit scores can get a loan approved, but with a lower score, you may be turned down by lenders.

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There’s good news for every borrower. Your credit score can change for the better. Improving your score takes some patience and effort, but you can boost your credit score fast with a little knowledge and commitment. This practical guide on how to improve credit score, for bad credit holders, offers actionable tips and advice to earn more favourable loan and credit terms.

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Table Of Contents

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• What Is A Credit Score And Why Does It Matter?
• How To Check Your Credit Score?
• What Is A Good Credit Score For Loan Approval?
• Tips To Improve Your Credit Score
• How Does Klinq Make Borrowing Easier?
• FAQs

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What Is A Credit Score And Why Does It Matter?

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A credit score is a three or four-digit number that represents and measures the creditworthiness of an individual and is generally available from rating agencies’ databases. In India, a good credit score ranges from 700 to 900 and is compiled from information contained in an individual’s credit bureau reports provided by companies like CIBIL, Experian, CRIF High Mark, and Equifax.

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Lenders use this score to decide:

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• Whether to approve or reject your loan application
• How much credit to extend to you?
• What interest rate to offer?
• The repayment terms you qualify for

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How To Check Your Credit Score?

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Whether you’re applying for a personal loan, renting an apartment, or checking your credit before applying for a new credit card, your credit score can play an important role. So, with that in mind, let’s learn how to check credit score.

Free Ways To Check Your Score:

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• CIBIL official website (one free report per year)
• Experian India portal
• Third-party finance apps and platforms
• Similar to your credit history, your credit score is now easily available for you to check, and many banks and NBFCs display it on their app dashboards.

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However, it is important to review the whole report as well as the number. You will want to check the report for any errors, such as incorrect personal details, mistakes, outdated or even fraudulent entries. Many people are unaware of how common errors are, but correcting them is relatively quick and will have a positive effect on your score.‍

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What Is A Good Credit Score For Loan Approval?

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Having a credit score of 750 plus is a good credit score for loan approval that we would recommend aiming for. This will enable you to access credit in a timely and cost-effective manner, particularly in cases where you need to avail credit very quickly, such as for medical emergencies, unexpected expenses or timely opportunities.

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Tips To Improve Your Credit Score

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While fixing damaged credit scores takes time, there are several proven techniques and tips to improve credit score that, when used collectively, will give you a quick and lasting boost to your score over time.

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Pay Every Bill On Time

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Your payment history is the biggest criterion for arriving at your credit score. Even a single missed EMI or a late payment can single-handedly decrease your score. To avoid such hiccups, enable auto-debit for EMIs, credit cards, loans and other credit obligations. Payment on time is the best way to increase credit score fast.

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Reduce Your Credit Utilisation Ratio

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Even if you repay your bill on time, if you use up more than 30% of your available credit, your score can drop. To reduce it:

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• Pay down outstanding balances actively
• Request a credit limit increase without increasing spending
• Put them on all your cards if you have them.

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Do Not Close Old Accounts

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Credit length, which is how long you've had your credit, is an important factor in your score. By closing old accounts, such as a card you have paid off and never use anymore, you will shorten the age of your open credit accounts, decreasing the average age of your credit. Try to keep old, inactive credit cards active by making a small purchase or payment on them from time to time.

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Limit Hard Enquiries

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It is common for lenders to conduct a hard enquiry on your credit file each time you apply for a new loan or credit facility. Multiple enquiries in a short period can indicate financial pressure and negatively affect your score. Research products before applying for a credit facility to avoid any unnecessary enquiries on your credit file. Only apply for credit when it is necessary.

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Review And Dispute Errors On Your Report

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You can report any errors to the relevant credit bureau free of charge, and once corrected, this can increase your score.

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• Loans or credit cards you never opened
• Incorrect personal information
• Accounts marked overdue despite timely payments
• Outdated negative entries that should have been removed

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How Does Klinq Make Borrowing Easier?

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Klinq is an instant personal loan app made specifically for the digital natives of India.

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• Get instant online approval for your loan in seconds!
• Using DigiLocker for identity verification on the platform.
• This service uses the Account Aggregator framework for bank verification through secure consent from the user.
• We offer a fixed 3-month EMI cycle. For example, if EMI 1 is due on Day 30, then EMI 2 is due on Day 60, and EMI 3 is due on Day 90.
• Fixed annual percentage rate of 24.9%, so you know exactly how much you'll be paying back every month.
• With our built-in rewards programme, you can also earn points when you make on-time repayments and use them to offset processing fees or interest on your loan.

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What’s interesting about Klinq rewards is that it really incentivises you to improve your credit score by giving you 100 points (₹1 each) for every on-time EMI & 750 points (₹750) for completing your 5th loan. Thus, Klinq rewards you for your responsible behaviour in the same way as a healthy credit score is created.

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Conclusion

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Your credit score is one of the most valuable assets that you have. We explain how and why your credit score is calculated, show you how to check your credit score and arm you with tried and tested tips on how to improve your credit score to secure the best loans at the lowest interest rates.

In just a few seconds, you can have access to the cash you need with Klinq. More than just facilitating the borrowing process, Klinq helps you develop good financial habits and a strong credit score over time.

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FAQs

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Q1: How long does it take to improve a credit score?

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Minor improvements, from reducing credit utilisation or disputing errors, can show up within 30 to 60 days. Recovering from serious delinquencies or building from scratch typically takes 6 to 18 months of consistent, positive behaviour.

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Q2: What is the minimum credit score needed for a personal loan in India?

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Most lenders these days look at the credit score and prefer to approve loans at 700+ (750+ being ideal). There are some digital lenders like NBFCs that may consider 650-700 as well, but at higher interest rates or lower amounts.

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Q3: Can I get a loan with a low credit score?

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Yes, but your options are limited. Although some NBFCs, digital lenders like Kling, may look at alternative criteria like income stability and bank statements for repetitive transactions, it is always beneficial to improve your credit score beforehand for better terms, lower interest rates, higher loan amounts and quicker disbursals.

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