Loan rejected due to low credit score? 5 smart ways to boost it fast

Mint

15-05-2025

A growing number of borrowers are facing loan rejections from major banks such as HDFC Bank, SBI, Kotak Bank among others. This is a consequence of subpar credit scores.
As lending institutions tighten lending rules and norms, maintaining a very strong credit profile has become crucial for securing personal loans, credit cards along with other credit instruments at favourable interest rates.
A credit score generally ranges from 300 to 900, thus reflecting an individual borrower's credit worthiness, integrity and sincerity in repayment of borrowed money.
Now all scores over 720 are generally considered good, boosting the likelihood of loan approvals. On the other hand, all scores below the mark of 650 can result in rejections or higher interest rates.
According to Rohan Bhargava, Co-founder of CashKaro and EarnKaro, 'Building a strong credit score doesn't require large loans. Start small: using a secured credit card, paying utility bills on time, or responsibly using Buy Now Pay Later (BNPL) services can all contribute to your credit profile.'
He further added that, 'If you're salaried, you may qualify for an entry-level credit card. To maintain a healthy score, follow three key habits: pay your bills on time, keep credit utilisation below 30%, and avoid frequent hard inquiries. Data shows nearly 30% of young Indians have scores below 650, not due to defaults, but due to limited credit history. Begin early and stay disciplined. A strong credit score helps with loan approvals, better card limits, and even renting homes or securing jobs.'
Further, as per Reserve Bank of India (RBI), individuals are entitled to one free credit report check on an annual basis from each credit bureau. This gives borrowers the opportunity to check, monitor and rectify errors and discrepancies.
Hence, keeping the above important facts in mind, here are five strategies to enhance and boost your credit score to ensure smooth approval of loans and credit cards: Timely repayments: Regularly paying credit card bills and personal loan EMIs on or before the due date immensely boosts your credit score.
Regularly paying credit card bills and personal loan EMIs on or before the due date immensely boosts your credit score. Maintain low credit utilisation: Focus on using less than 30% of your total available credit limit. This demonstrates sensible credit behaviour and is taken as a positive by lenders.
Focus on using less than 30% of your total available credit limit. This demonstrates sensible credit behaviour and is taken as a positive by lenders. Limit new credit applications: Frequent applications for new credit cards, personal loans along with other credit instruments can negatively influence your credit score. You should apply for new credit lines such as new loans and new credit cards only when it is necessary.
Frequent applications for new credit cards, personal loans along with other credit instruments can negatively influence your credit score. You should apply for new credit lines such as new loans and new credit cards only when it is necessary. Diversify credit mix: Diversification of credit mix is also another crucial aspect. You should focus on having a mix of secured (like home loans) and unsecured (like credit cards) credit that can positively impact your score.
Diversification of credit mix is also another crucial aspect. You should focus on having a mix of secured (like home loans) and unsecured (like credit cards) credit that can positively impact your score. Regular credit report checks: Consistent review of your credit report to check and identify inaccuracies to dispute them promptly also goes a long way in keeping your credit score steady and in the healthy order.
According to financial experts building and sustaining a good credit score is a slow and gradual process. It requires discipline and composure in financial habits.
That is why by adopting the above discussed strategies, individual borrowers can boost and improve their credit profiles, thus increasing their chances of easier loan approvals and better financial opportunities in the future.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.