What does your credit score really mean for your loan application? 

Credit Score

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Personal Finance

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Team MONEYME|28 January 2025| 2-minute read

Before applying for a personal loan, it’s important to check your credit score.  

Even if you don’t know your score, your lenders can see it – and they’ll likely seriously consider it before approving your application.  

What is your credit score?  

Your credit score is a number that indicates how reliable you are financially, based on your credit history.  

Your past credit-related conduct affects your score – both positive and negative. This includes whether you’ve met payment deadlines on time, how often you’ve applied for credit, whether you’ve filed for bankruptcy, and any relevant court judgments you’ve received.  

Learn more about your credit score over here.  

How does your credit score affect your loan application? 

When you submit your loan application, your lender can access your credit score.  

The higher your score, the more likely your lender will approve your application. That’s because a high score indicates that, when you borrow money, you tend to pay it back on time – so, for a lender, you look like a low risk.  

In contrast, the lower your score, the less likely your application will be approved. It suggests blemishes on your credit history – such as late repayments or multiple rejected credit applications. A low score makes you risky in a lender’s eyes.  

Does your credit score affect your interest rate? 

With many lenders, your credit score plays a huge role in determining your interest rate. It’s essentially your financial trust score—showing lenders how reliable you are with borrowed money. 

A high credit score means you’re seen as more reliable by lenders – because people with high scores are statically less likely to default – and generally qualify for lower interest rates. 

When lenders approve customers with lower scores for a loan, they typically charge them higher interest rates to offset the higher risk of missed payments or defaults. 

By improving your credit score, you lower your perceived risk, which can help you secure a better deal on your loan. 

While your credit score is crucial, it’s not the only factor that affects your interest rate. Lenders also consider several other factors, like the type of loan, loan term, loan amount and market conditions. 

How can you improve a low credit score?  

If your score is low, you can take steps to improve it. If you apply for a loan anyway and get rejected, you could lower your score further. 

Steps that could increase your score (or at least stop you harming it) include making payments on time, using a credit card responsibly, and contacting your lender if you’re struggling financially. To learn more, take a look at these 5 clever ways to give your score a boost. 

Is your credit score the only factor that could affect your loan application? 

No. While your credit score is influential, your lender will consider a variety of factors.  

These include the difference between your income and expenses, your employment status, and your assets and liabilities (including other debts). 

How to check your credit score  

Checking your credit score is easy. Simply download the MONEYME app.  

You can see your score as often as you like for free – without having any negative impact on your score. 

Keeping an eye on your credit score 

If you’re working on boosting your score, it’s a good idea to check it regularly. The more it increases, the more motivated you’ll feel. 

With a high score, you’re more likely to get your personal loan approved – and be one step closer to hitting your next financial goal. 

Check your score for free

Do you know your credit score? Download the MONEYME app to check your score for free today.