Finance Tips • Credit Score
The Complete Guide to Improving Your Credit Score in India
Your credit score plays a crucial role when you apply for a loan in India. A higher score means better chances of approval, lower interest rates, and more negotiating power. In this guide, you’ll learn how to improve your credit score step-by-step, with practical tips that any Indian borrower can follow.
What Is a Credit Score and Why It Matters in India
A credit score is a three-digit number, usually between 300 and 900, that reflects how responsibly you have handled credit in the past. Banks and NBFCs look at this score when you apply for a personal loan, business loan, car or vehicle loan, or even a credit card.
In India, your credit score is maintained by recognised credit bureaus such as CIBIL (TransUnion), Experian India, CRIF High Mark, and Equifax. These bureaus collect your credit data from banks and financial institutions.
The Reserve Bank of India (RBI) also issues guidelines that influence how credit is reported and managed in the country, making your repayment behaviour extremely important.
Ideal Credit Score Range for Loan Approval
The higher your score, the more comfortable lenders feel in offering you better terms. Here’s a simple overview of what different score ranges typically mean in India:
| Score Range | Meaning | Loan Approval Chance |
|---|---|---|
| 750 – 900 | Excellent | Very high approval, best interest rates |
| 700 – 749 | Good | High approval, competitive interest rates |
| 650 – 699 | Average | Possible, but interest rate may be higher |
| 550 – 649 | Poor | Difficult, stricter checks and higher rates |
| 300 – 549 | Very Poor | Usually not eligible for most loans |
Tip: If your score is below 700, it is wise to focus on improvement before applying for a big loan like a home loan or high-ticket business loan.
Proven Ways to Improve Your Credit Score in India
1. Pay All EMIs and Credit Card Bills on Time
Timely repayment is the single most important factor in building and maintaining a good credit score. Even one missed EMI or credit card payment can negatively impact your score. Consider setting up auto-debit or payment reminders through your bank app or UPI app.
2. Keep Your Credit Utilisation Below 30%
Try not to use more than 30% of your total credit card limit. For example, if your credit limit is ₹1,00,000, aim to keep your usage within ₹30,000. Consistently maxing out your card signals higher risk to lenders, even if you pay on time.
3. Avoid Applying for Multiple Loans or Cards at the Same Time
Every time you apply for a credit product, the lender makes a hard inquiry on your report. Too many hard inquiries within a short period can reduce your score and give the impression that you are credit-hungry.
4. Check Your Credit Report Regularly for Errors
Sometimes, old closed loans may still appear as active or incorrect late payments may show up on your report. You can download your credit report from CIBIL or other bureaus and raise a dispute if you find any mistakes.
5. Maintain a Mix of Secured and Unsecured Loans
A balanced credit profile includes both secured loans (like gold loans, home loans) and unsecured loans (like personal loans and credit cards). Responsible repayment across these products shows lenders that you can handle different forms of credit.
6. Avoid “Settling” Loans Whenever Possible
If a loan is marked as “settled” instead of fully “closed”, it can harm your score and remain in your credit history for years. Whenever possible, try to fully pay off and close loans in a proper manner rather than opting for a settlement.
Frequently Asked Questions on Credit Score Improvement
How fast can I improve my credit score if it is low?
You may start seeing positive changes within 3–6 months if you focus on timely payments, lower your credit utilisation, and avoid fresh defaults. However, serious issues like write-offs or settlements may take longer to recover from.
Will taking a gold loan help my credit score?
Yes, if you take a gold loan from Thirukochi Fincap or any regulated institution and repay it on time, it builds a positive repayment record, which can help improve your score. Gold loans are secured loans and are often easier to get approved even if your credit score is currently moderate.
Is checking my credit score online safe and does it lower my score?
Checking your score through authorised platforms such as CIBIL or Experian India is safe. These are considered soft inquiries and do not reduce your credit score.
Where can I learn more about responsible borrowing in India?
You can explore educational content on reputable finance portals like Moneycontrol Personal Finance and other RBI-linked resources. For personalised guidance, you can also speak to our experts at Thirukochi Fincap.
Need a Loan While You Improve Your Credit Score?
At Thirukochi Fincap, we offer a range of customer-friendly products including Personal Loans, Business Loans, Gold Loans, vehicle and education loans tailored to your needs. With Kerala’s trusted financial partner by your side, you can focus on building a strong credit profile while getting the funds you need.
Click here to talk to our loan experts and explore the best option for you →