Is it really true that a good credit score makes a difference when it comes to loan approval? In short – yes, it does. While there are a number of factors banks and lenders will take into consideration before approving or rejecting any loan application, a good credit score can make a significant difference in increasing your chances of success when you’re applying for a loan.

Recent CTOS study reveals that consumers with high credit scores are five times more likely to secure loan approvals

According to the CTOS Score Band vs Loan Approval Rates Study 2024, those with high CTOS Scores had 74% approval rates for auto loans and 61% approval rates of mortgages. In contrast, those with low CTOS Scores had a mere 9% chance of securing an auto loan, and a 22% approval rate for mortgages. The study, which utilised a sample of over 250,000 applications for financing within one month of the MyCTOS Score report being checked, also highlights the disparity in loan approval rates between the various CTOS score categories. The largest disparity between those with the highest and lowest credit scores comes from credit card applications. Consumers with a poor CTOS Score only had a 10% chance of being approved for a credit card, while those with an excellent score had an approval rating of 76%.

How to improve your CTOS Score

If your CTOS Score isn’t as good as you want it to be, don’t worry. You can always take steps to improve your credit score, no matter how low it is. Your score may not improve immediately, but with good planning and responsible credit behaviour, your score will gradually improve.

Here are some quick tips on how you can improve your CTOS score:

Pay your bills on time

Try to pay your bills on time every month. Many borrowers face low CTOS scores due to multiple debts—credit cards, personal loans or overdue bills. If you’re using a credit card, aim to pay at least the minimum amount if you can’t pay the full balance. Missing payments—even for just a month or two—will show up in your credit report and affect your score. 

What’s more efficient in paying off your bills?

Consider debt consolidation: combining all your debts into one monthly payment with a lower interest rate, and setting your payments to auto-debit. With this method, you can ensure you pay your bills on time and avoid missed payments that hurt your credit score while keeping your monthly payments within your budget.

Keep amounts owed low

Try to keep your debt balances low. Make it a habit to pay down your debts regularly so the amounts owed decrease over time. Maintaining discipline in your repayment habits will help your credit health in the long run.

If your monthly commitments are too heavy and you’re struggling to pay off multiple high-interest debts, a safe personal loan with a lower interest rate can be a smart option. This type of loan helps you pay off your existing debts and combine them into one manageable monthly repayment—often lower than your original commitments. When applying for loans, remember: don’t borrow more than you really need. Any loan amount you take will accrue interest and must eventually be repaid.

Re-establish your credit history if you’ve had problems

It’s important to fix your credit history if you’ve had issues in the past. Ignoring the problem won’t make it go away—it may even lead to bigger challenges down the line.

However, avoid taking drastic steps like quickly closing multiple unused credit cards, opening several new accounts, or applying for too many loans at once. These actions can hurt your credit score.

If you’re unsure where to start, consider speaking to a credit counsellor or a trusted financial services advisor like Direct Lending for guidance on improving your credit health. They provide free services, loan comparisons and access to bank, koperasi and licensed lenders who can help you manage your debts safely and responsibly.

Need Help With Your Loan? Let Direct Lending Be Your Trusted Partner

If you’re looking for a safe and transparent way to find the right loan for your needs, Direct Lending is here to help.

They’re more than just a loan platform – they are your loan expert, guiding you from start to finish. Whether it’s understanding your eligibility, comparing loan options or ensuring you avoid scams and illegal lenders, they have got you covered.

With Direct Lending, you get:

✅ Access to licensed lenders only

✅ Transparent loan comparisons—no hidden fees, no upfront payments

✅ Guidance on which loan suits your financial situation

✅ Support throughout your loan application process—from A to Z