Why Credit Score Matters More Than You Think
Your credit score is more than a number, it’s your financial reputation. Whether you’re applying for an instant personal loan online, a credit card, or a home loan, this score helps lenders determine how trustworthy you are as a borrower.
A good score opens the door to instant loan approval, lower interest rates, and better repayment terms. A poor one, however, can limit your borrowing options or lead to higher costs.
Understanding what affects your credit score is the first step toward maintaining a healthy one. Let’s break it down.
What is a Credit Score and How It’s Calculated
A credit score is a three-digit number (ranging from 300 to 900) that summarises your creditworthiness. It’s calculated by credit bureaus like CIBIL based on your financial behaviour and repayment track record.
Here’s what typically goes into it:
- Payment history: Consistency in repaying EMIs and credit card dues.
- Credit utilisation: How much of your total available credit you use.
- Credit mix: Your balance between secured and unsecured loans.
- Credit history length: How long you’ve held credit accounts.
- Recent enquiries: How many times you’ve applied for new credit recently.
Each of these factors plays a crucial role in determining your score, and ultimately, your CIBIL score for personal loan eligibility.
Top 5 Factors That Affect Your Credit Score
1. Repayment History (35%)
Your payment history has the biggest impact. Timely EMI and credit card payments show lenders that you’re reliable. Even one missed payment can lower your score and stay on your report for months.
Tip: Set up auto-debits or reminders to never miss a due date.
2. Credit Utilisation Ratio (30%)
This refers to how much of your available credit you’re using. Keeping your credit utilisation below 30% is ideal.
Using too much credit frequently signals financial stress to lenders.
Example: If your card limit is ₹1,00,000, try to spend no more than ₹30,000 per billing cycle.
3. Length of Credit History (15%)
The longer you’ve been using credit responsibly, the better. Old credit accounts show lenders a history of reliability. Closing old cards or accounts can reduce your average account age and negatively affect your score.
Tip: Keep your oldest credit card active with small, manageable transactions.
4. Credit Mix (10%)
Having both secured (like car or home loans) and unsecured loans (like personal loans or credit cards) shows you can handle different kinds of credit. Relying too heavily on one type, especially unsecured loans may reduce your score.
Tip: Diversify your borrowing responsibly.
5. New Credit Enquiries (10%)
Every time you apply for a loan, lenders make a “hard inquiry” on your credit report. Too many in a short time can lower your score.
Tip: Avoid multiple applications; choose a trusted personal loan app in India like FatakPay for reliable approval chances.
Tips to Maintain a Healthy Credit Score
- Pay all EMIs and credit card bills on or before their due date.
- Keep credit card usage below 30% of your total limit.
- Review your credit report every few months to catch errors.
- Don’t apply for multiple loans simultaneously.
- Use digital financial tools to check credit score free and track improvements.
Consistency, patience, and responsible usage are the pillars of good credit health.
FatakPay’s is Your Partner in Building Credit Health
At FatakPay, we believe that financial inclusion starts with credit awareness. Whether you’re applying for an instant personal loan without CIBIL score, or looking to improve your existing one, we’ve got you covered.
Here’s what you can expect with FatakPay:
✅ Quick loan approvals — Fast and paperless.
✅ Transparent process — No hidden charges or surprises.
✅ Credit-friendly products — Tailored for new and low-score borrowers.
✅ Responsible lending approach — Designed to help you build, not burden.
We’re more than just a lending platform, we’re your partner in long-term credit wellness.
Start Building Your Credit Confidence Today
Whether you’re starting your credit journey or rebuilding your score, FatakPay makes it simple.
Track your score, apply for credit confidently, and unlock smarter financial opportunities.
Download the FatakPay App to apply for instant personal loans and take control of your credit future.
FAQs
1. How is credit score calculated?
It’s calculated based on repayment history, credit utilisation, credit mix, length of history, and new credit enquiries.
2. What is a good CIBIL score for a personal loan?
A score of 750+ is excellent for quick approvals, but FatakPay also offers solutions for those with lower scores.
3. Can I get an instant personal loan without a CIBIL score?
Yes, FatakPay provides instant personal loans without CIBIL score checks for eligible new borrowers.
4. How can I improve my score quickly?
Pay bills on time, lower utilisation, and avoid frequent credit applications.
5. Does checking my credit score reduce it?
No, checking your own score is a “soft inquiry” and doesn’t impact your rating.
