630 Credit Score: Is It Good or Bad?

A credit score of 630 falls into the fair category, indicating moderate creditworthiness. While it is slightly better than a score of 600, it still signals financial behaviour that lenders may view as risky. It can result in limited access to financial products or unfavourable terms. Understanding how a 630 score is perceived and taking steps to improve it can help you unlock better financial opportunities.

 

In India, TransUnion CIBIL, one of the most popular credit bureaus, calculates the scores in a range of 300 to 900. A score of 630 suggests some issues in the past, such as missed payments, high credit utilisation, or limited credit history. However, it is possible to improve this score with consistent and disciplined financial behaviour.

Credit scores are calculated using varied models by different bureaus. A score of 630 is categorised as fair by most credit bureaus but may vary slightly based on their scoring criteria.

Lenders may assess this score alongside factors such as income, employment stability, and debt-to-income ratio before approving credit applications. While a 630 score does not eliminate credit options, it may result in higher interest rates or stricter conditions.

A 630 credit score impacts your financial opportunities in the following ways:

Higher Interest Rates

Borrowers with a 630 score are viewed as moderate-risk customers, which often results in higher interest rates for loans and credit cards.

Lower Chances of Loan Approvals

Lenders may approve loans but impose stricter conditions, such as shorter tenures or smaller loan amounts. Secured loans are easier to access compared to unsecured ones.

Limited Credit Card Options

Premium credit cards with higher rewards and perks may be inaccessible with a 630 score. However, you may qualify for basic or secured credit cards, which can help improve your score over time.

Higher Insurance Costs

Insurance providers often associate lower credit scores with higher risk. A 630 score may result in increased premiums for policies.

Challenges in Renting Property

Landlords may hesitate to approve rental applications from individuals with a 630 CIBIL score.

Lower Financial Flexibility

With limited access to favourable credit options, financial flexibility can be impacted, making it harder to manage emergencies or large purchases.

Increased Scrutiny by Employers

In some industries, employers may view a fair credit score as a potential red flag, particularly for roles involving financial responsibilities.

Improving a 630 credit score requires consistent efforts and financial discipline. Follow these steps to enhance your credit profile:

Prioritise Timely Payments

Ensure all loan EMIs and credit card payments are made on time. Even one missed payment can have a significant negative impact on your score.

Lower Your Credit Utilisation Ratio

Keep your credit card balances below 30% of your total credit limit. For example, if your limit is ₹10 Lakhs, aim to use less than ₹3 Lakhs.

Avoid Unnecessary Credit Applications

Limit new credit applications to avoid hard inquiries, which can temporarily lower your score. Focus on managing your existing credit effectively.

Check for Errors in Your Credit Report

Review your credit report periodically for inaccuracies. Dispute errors such as incorrect late payments or unrecognised accounts with the credit bureau promptly.

Pay off High-interest Debt

Reducing outstanding debt, especially those with high interest rates, can improve your debt-to-income ratio and positively affect your score.

Diversify Your Credit Portfolio

Having a balanced mix of credit types demonstrates responsible credit management. 

Keep Older Credit Accounts Open

Long-standing credit accounts with positive histories can boost your score. Avoid closing such accounts unless necessary.

Use Secured Credit Cards

Secured credit cards, linked to a fixed deposit, are a good option for rebuilding your credit. Use them responsibly and make timely payments to improve your score.

Work with a Financial Advisor

In case you are struggling to manage your finances or improve your score, consult a financial advisor. They can provide tailored advice to help you achieve your financial goals.

A 630 credit score reflects fair creditworthiness and presents opportunities for improvement. By adopting responsible financial habits, such as making timely payments and managing credit utilisation, you can improve your score and access better credit products.