By Mike Barret 
In a world where individuals’ financial needs are often unmet, sometimes urgent requirements for emergency spending may not be present. A personal loan is one of the most accessible financial tools available today, offering individuals the flexibility to manage emergencies, fund significant life events, or consolidate existing debt.
However, a credit score is one of the most crucial factors determining your personal loan eligibility. In India, this score is commonly referred to as your CIBIL score, and it plays a defining role in whether you qualify for a loan and under what terms.
Your CIBIL score summarises your creditworthiness, determined by your repayment history, credit utilisation, outstanding debts, and the length and type of your credit history. A high credit score makes you a preferred candidate for lenders, enabling you to access better interest rates and higher loan amounts. Conversely, a low score can delay or deny access to much-needed funds.
In this article, we will explore why your credit score matters, what constitutes the best CIBIL score, and most importantly, how to improve your CIBIL score to qualify for a personal loan, primarily through digital-first platforms like Stashfin that are transforming India’s credit landscape.
Why Credit Scores Matter for Personal Loans?
A credit score is a three-digit number ranging from 300 to 900, calculated by credit bureaus like TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. A credit score is based on the individual’s financial behaviour, including repayment record, types of credit used, total debt, and the age of their longest running credit accounts.
In most cases, lenders consider a score above 750 the best CIBIL score. This increases your chance of loan approval and gives you access to favourable terms, such as lower interest rates, flexible EMIs, and higher loan amounts.
Why is a Credit Score Important for Personal Loans?
Since personal loans are unsecured, your credit score becomes the most critical criterion for lenders to assess your ability and intent to repay. Here’s how your score affects your loan journey:
- Loan approval chances increase with a good score.
- Having a higher credit score can lead to lower interest rates.
- You may be eligible for higher loan amounts with flexible repayment options.
- Some lenders may provide instant approval and disbursal to borrowers with strong scores.
What are Some Factors That Influence Your CIBIL Score?
To understand how to improve your CIBIL score, it’s essential to know the components that impact it:
1. Repayment History
Your payment history is the single most significant factor affecting your credit score. Missed or delayed payments can lower your score, while consistent on-time payments boost it.
2. Credit Utilisation Ratio
This refers to how much credit you use compared to your total limit. For example, if your credit card limit is ₹1,00,000 and you spend ₹70,000 regularly, your utilisation ratio is 70%, which is considered high. Ideally, you should keep this ratio under 30%.
3. Credit Mix
A good balance of secured (e.g., home or auto loan) and unsecured (e.g., personal loan or credit card) credit accounts indicates sound financial management and can positively impact your score.
4. Length of Credit History
The age of your credit accounts reflects your experience with credit. A longer history is viewed more favourably.
5. Number of Enquiries
Frequent loan applications in a short span can hurt your credit score, as they reflect a higher dependence on credit.
How Can You Improve Your CIBIL Score for Better Loan Eligibility?
Improving your CIBIL score takes time and consistency. Here are several strategies you can adopt to build and maintain a strong credit score to qualify for a personal loan:
1. Pay Bills and EMIs on Time
Set up reminders or auto-debit instructions to ensure you never miss a due date. Timely payments are critical to building a strong credit profile.
2. Keep Credit Utilisation Low
One of the best practices to follow is to keep your credit score high is to maintain credit utilisation rate for credit cards below 30% of your total credit limit. If needed, request an increase in your credit limit or reduce spending to maintain a lower utilisation ratio.
3. Avoid Frequent Loan Applications
Each loan application triggers a hard enquiry that may slightly reduce your score. Instead of applying to multiple lenders at once, consider pre-approved offers or soft enquiry options, primarily through platforms like Stashfin.
4. Use a Personal Loan EMI Calculator
Before applying for a loan, it may be beneficial to use a personal loan EMI calculator to evaluate your repayment capability. Over-borrowing or higher EMI could lead to EMI defaults, which would lower your credit score.
5. Dispute Errors on Credit Reports
Regularly check your credit report for inaccuracies such as wrong account details, duplicate entries, or payment status errors. Dispute any discrepancies with the credit bureau immediately.
6. Reduce Existing Debts
It is essential to pay off outstanding dues on time, thus it may be better to consider a debt consolidation loan through a single loan provider to avoid having to pay multiple lenders at different times.
7. Maintain Old Accounts
One of the determinants of credit score is the age of your oldest account and the average age of your accounts. A longer history of responsible credit use has the potential to improve your score. Thus if you are considering closing old credit cards or loan accounts, it may be relevant to retain them to maintain your credit history active with small transactions.
Conclusion
A credit score is a fundamental indicator of a creditor’s financial health, with a strong score opening the door to faster personal loan approvals, better interest rates, and higher loan limits. In contrast, a low score can restrict your access to much-needed loans.
Fortunately, improving your CIBIL score is entirely within your control. You can gradually build a robust credit profile by maintaining timely repayments, reducing outstanding dues, monitoring your credit report, and being mindful of your credit usage.
Platforms like Stashfin are reshaping how Indians access personal loans, especially by serving those with limited or recovering credit histories. Whether you’re planning for a future goal or dealing with an emergency today, improving your credit score ensures that credit is available to you on your terms, efficiently, securely, and affordably.
- Modern SEO Trends and Future-Proof Strategies for Digital Marketers - January 28, 2026
- Fibe Personal Loan: Know Everything Before Getting an Instant Personal Loan - October 19, 2025
- Why Rehab Works: 8 Key Benefits of Professional Addiction Treatment - August 14, 2025