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5 Tips to Improve a Low Credit Score and Get a Personal Loan

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5 Tips to Improve a Low Credit Score and Get a Personal Loan

Are you looking for a personal loan with a low credit score & struggling to get it?  Earlier banks and other financial institutions considered credit score as the key factor to assess your creditworthiness of the applicant, impacting the loan amount, interest rates, and repayment terms you qualify for. However these days having a low credit score doesn’t mean you’re out of borrowing options. You can consider a new age best personal loan apps as they consider different factors to assess the credit worthiness. Based on the other factor even with low credit scores. It is also important to take strategic steps to improve your credit score and increase your chances of securing a personal loan that meets your financial needs.

In this blog, we’ll share five tips to help you improve your credit score and discuss how FlexSalary can provide a better alternative for online personal loans

What is a Credit Score?

A credit score is a numerical representation of your creditworthiness, typically ranging from 300 to 900. Higher scores indicate better creditworthiness. Your credit score is influenced by several factors, including:

  1. Payment History: Timely payments improve your score, while late payments harm it.
  2. Credit Utilization Ratio: The amount of credit you’re using compared to your total available credit. Keeping this ratio low helps your score.
  3. Length of Credit History: Longer credit histories generally boost your score.
  4. Types of Credit Accounts: A mix of different types of credit (credit cards, loans) can positively impact your score.
  5. New Credit Inquiries: Applying for new credit can temporarily lower your score.

5 Essential Tips to Improve Your Credit Score and Secure a Personal Loan

1. Check Your Credit Report Regularly

Start by obtaining a copy of your credit report from credit bureaus like CIBIL, Experian, or Equifax. Review the report for any inaccuracies, such as incorrect account details or unauthorized inquiries, which could negatively impact your score. Dispute any errors promptly to ensure your credit report reflects accurate information.

2. Make Timely Payments

Payment history is a significant factor in your credit score calculation, accounting for approximately 35% of the total score. Ensure you pay your bills, including credit card bills, loan EMIs, and utility bills, on time each month. Setting up automatic payments or reminders can help you stay organized and avoid late payments that can harm your credit score.

3. Reduce Credit Utilization Ratio

Your credit utilization ratio refers to the amount of credit you’re currently using compared to your total available credit limit. Aim to keep your utilization ratio below 30% across all credit accounts. For example, if your total credit limit is ₹1 lakh, try to keep your outstanding balances below ₹30,000. Paying down existing debt and avoiding maxing out credit cards can help lower your utilization ratio and improve your credit score.

4. Limit New Credit Applications

Each time you apply for a new credit card or loan, a hard inquiry is recorded on your credit report, which can temporarily lower your credit score. Minimize new credit applications, especially if you’re actively working on improving your credit score. Instead, focus on managing existing credit responsibly and demonstrating a consistent repayment history.

5. Consider a Secured Loan or Credit Builder Loan

If you’re struggling to qualify for a traditional personal loan due to a low credit score, consider applying for a secured loan or a credit builder loan. Secured loans are backed by collateral, such as savings deposits or assets, which reduce the lender’s risk and may improve your chances of approval. Credit builder loans are designed specifically to help individuals establish or rebuild credit by making small monthly payments that are reported to credit bureaus.

FlexSalary: A Better Alternative for Personal Loans

While traditional personal loans may have stricter eligibility criteria and higher interest rates for those with low credit scores, FlexSalary offers a more flexible and accessible alternative. Unlike some loan providers, FlexSalary considers multiple factors beyond just your credit score when making loan decisions. There is no guaranteed approval for any credit score, including credit score 600 or above. Instead, FlexSalary uses an algorithm that evaluates various factors, including those mentioned above and your social profile, to determine your eligibility. This approach allows FlexSalary to cater to individuals with varying credit profiles, including those with lower scores. Here’s why FlexSalary stands out:

– Quick and Easy Application: Apply online with us in minutes. Our digital process is straightforward, eliminating lengthy paperwork and providing quick approval.

– Flexible Loan Amounts: Borrow from ₹4,000 to ₹2,00,000, based on your eligibility. This allows you to choose amounts that fit your needs.

– Transparent Fees: We have no hidden charges. You can review interest rates and repayment terms upfront for clarity.

– Improves Credit Score: Manage your loan responsibly with us to improve your credit score. Timely repayments are reported to credit bureaus, enhancing your creditworthiness.

Application process for FlexSalary

Here’s how you can apply:

– Apply: Answer a few questions about yourself and get approved in less than 5 minutes. Add your PAN, Phone number, address and employment details

–  Verify: Verify your details on a quick Video KYC call on the app. You will only need these; Identity proof (PAN), Address proof (Aadhaar, Driving License etc.), a good network

– Activate: Activate your lifetime credit line by digitally signing the agreement using your Aadhaar linked phone number. No paperwork needed.

Bottom Line:

If you have a low credit score, improving it is important for securing personal loans with favorable terms. By diligently monitoring your credit report, making timely payments, managing your credit utilization, limiting new credit applications, and considering alternative loan options like FlexSalary, you can enhance your creditworthiness over time.

FlexSalary stands out as one of the best personal loan apps for borrowers, offering accessible loans that not only meet immediate financial needs but also contribute to improving your credit score. Begin your path to financial health today by using these strategies and exploring flexible loan options suited to your needs.