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BEST INTEREST RATES
When you apply for a home loan, personal loan, or car loan, lenders don’t just look at your income– they dig deeper into your credit report to understand how reliable you are with money. Your report gives them a snapshot of your credit score, repayment history, and overall financial behaviour.
Knowing the red flags lenders notice on your credit report can help you identify problem areas and improve your loan eligibility before you apply.
Let’s break down the five major warning signs lenders watch out for—and how you can fix them.
If you’ve ever defaulted on a loan or credit card, it leaves a lasting mark on your credit history. Some borrowers try to “settle” their debt by paying only part of the amount owed, but lenders view both defaults and settlements negatively.
While settlement is slightly better than a write-off, both reduce your credibility in the eyes of lenders. If you’re in financial trouble, try to repay and close the account fully instead of letting it be written off. Once settled, request a No Dues Certificate to make sure your report reflects it correctly.
Consistently paying your EMIs on time is the foundation of a healthy credit score. Late or missed payments show up in your report as DPDs (Days Past Due).
For example, if your report lists “30” under DPD, it means that payment was 30 days overdue. Frequent DPD entries signal repayment risk, making lenders hesitant to approve your next loan.
Pro Tip:
Always aim to pay before the due date—this shows strong repayment discipline and helps maintain a stable credit score.
Even small mistakes on your credit report–like an incorrect address, duplicate entries, or wrong payment history–can affect your loan approval chances. These errors might make it seem like you’ve missed payments or defaulted, even if you haven’t.
It’s a good habit to review your credit report every few months using a free credit score checker. If you find an error, raise a dispute with the bureau immediately to correct it. Clean and accurate reporting ensures lenders assess your creditworthiness fairly.
Each time you apply for a loan or credit card, the lender performs a hard enquiry on your credit report. Too many such checks in a short period can make you look “credit hungry,” which can reduce your credit score.
To avoid this:
Monitoring your credit report regularly helps you keep track of active loan enquiries and manage your profile better.
If you often use more than 40–50% of your credit limit, it signals financial stress. Lenders prefer borrowers who maintain a low credit utilisation ratio, as it shows responsible spending habits.
Try to pay off your balances regularly and avoid maxing out your credit cards. Keeping your utilisation below 30–40% can help you maintain a healthy credit score and qualify for better loan interest rates.
Many people forget about zero-balance or inactive accounts, thinking they don’t matter. But leaving such accounts open can cause problems—like hidden fees, misuse risks, or confusion in your credit history.
Once you’ve fully repaid a loan or cleared a credit card, close the account officially, even if the balance is zero. Always ask for written confirmation of closure. This small step keeps your credit profile clean and updated.
Your credit report plays a crucial role in determining your loan approval and EMI rates. Lenders look for consistency, responsibility, and timely payments.
To keep your report healthy:
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Use our EMI Calculator to plan your monthly EMIs and stay on top of your credit health before applying for your next loan.
