If you have ever tried to personal loan apply online or sought any other form of credit, you would know the significance of a good credit score. It’s a three-digit number that lenders use to assess your creditworthiness and determine whether to approve your loan application. But what exactly influences this score? Let’s delve into the key factors that can impact your credit score.

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Why Check Your Credit Score?

Before discussing the factors that impact your credit score, it’s important to understand why you should regularly perform a credit score check. Keeping tabs on your credit score helps you understand your credit health, correct any discrepancies in your credit report, and take steps to improve it if necessary.

Factors that Impact Your Credit Score

  • Payment History: Your payment history, including timely payment of your credit card bills and loan EMIs, is one of the most significant factors influencing your credit score. Late payments or defaults can negatively impact your score.
  • Credit Utilisation Ratio: This is the ratio of your current credit card balances to your available credit limit. A high credit utilisation ratio can indicate credit dependence and can lower your score.
  • Length of Credit History: The duration of your credit history also impacts your score. A longer history with a good repayment track record can be beneficial for your credit score.
  • Credit Mix: Having a mix of secured (like home loans, car loans) and unsecured loans (like personal loans, credit cards) in your credit portfolio can positively impact your score, as it shows your ability to manage different types of credit.
  • New Credit Applications: Every time you personal loan apply online or apply for new credit, the lender performs a hard enquiry on your credit report, which can lower your score. Multiple applications within a short span can significantly impact your score.
  • Credit Report Errors: Errors or inaccuracies in your credit report, such as wrong information about your credit accounts, can negatively impact your score. Regular credit score checks can help you spot such errors.

Strategies to Improve Your Credit Score

  1. Improving your credit score requires a disciplined approach to credit management. Here are some strategies:
  2. Pay your bills on time: Ensuring timely payment of your credit card bills and loan EMIs can help improve your score.
  3. Maintain a low credit utilisation ratio: Try to limit your credit card usage to 30% of your credit limit.
  4. Maintain a healthy credit mix: Having a balanced mix of secured and unsecured loans can improve your credit score.
  5. Limit new credit applications: Avoid applying for new credit frequently, as it can lead to multiple hard enquiries.


Understanding the factors that impact your credit score can help you make informed decisions and maintain a healthy credit profile. By regularly performing a credit score check, you can monitor your credit health and take necessary steps to improve your score. When you are ready to personal loan apply online or seek other credit, a good credit score can boost your chances of approval and secure you favourable loan terms. Remember, a good credit score is not just about securing credit; it’s a reflection of your financial discipline and stability.