650 Credit Score: Is it Good or Bad

A 650 CIBIL score falls within the ‘fair’ range, which generally spans from 600 to 699. It is not classified as poor, but it’s also not considered excellent. Lenders may perceive it with caution, as it suggests a moderate level of credit risk. 

For individuals with a 650 score, approval for loans or credit may be more difficult than for those with higher scores. However, it’s not impossible. The outcome depends on the lender's internal policies, loan type, and other factors like income and existing debt. 

It’s essential to understand that a 650 credit score may lead to higher interest rates or limited loan offers compared to those with better scores. If you’re seeking credit, it’s advisable to show stable income, a good repayment history, and a lower debt-to-income ratio to improve your chances.

A 650 CIBIL score can differ slightly depending on the credit bureau that provides it. A credit score of 650 generally falls within the ‘fair’ or ‘average’ range across different credit bureaus like TransUnion CIBIL, Experian, Equifax, and CRIF. This score indicates that the individual has a moderate level of credit risk, but there's room for improvement. 

While lenders may still offer credit products, they might do so with less favorable terms, such as higher interest rates. Let’s look at how this score is interpreted by major credit bureaus in India: 

Yes, obtaining a personal loan with a 650 CIBIL score is possible. However, approval depends on various factors such as the lender's policies, your income stability, and other financial criteria. While some banks may have stricter requirements, many NBFCs and digital lenders are more flexible and may consider your application favourably. It's essential to compare offers from different lenders to find the best terms suited to your financial situation.

Lender Eligibility Criteria

When applying for a personal loan with a 650 CIBIL score, lenders assess several factors: 

• Income Stability: A steady income stream of minimum 6 months to 1 year can enhance your repayment capacity in the eyes of lenders. 

• Employment Status: Both salaried and self-employed individuals with a minimum work experience or business vintage can apply. 

• Existing Debt Obligations: A lower debt-to-income ratio is considered favourable. 

• Age: Indian applicants aged between 21 and 60 years are usually eligible. 

• Employer Profile: Employment with reputed organisations can be advantageous. 

Banks may require additional documentation to verify your financial stability. NBFCs and digital lenders might offer more lenient terms but could charge higher interest rates. It's crucial to research carefully and evaluate all your options before you apply for a personal loan. 

Personal Loan Terms with a 650 CIBIL Score

According to IndusInd Bank, securing a personal loan with a 650 credit score is feasible but may come with certain conditions: 

• Higher Interest Rates: Personal loan interest rates can be slightly higher for this credit score, than for a credit score of 750 or above. 

• Lower Loan Amounts: Lenders may approve loan amounts of up to a smaller limit to mitigate risk. 

• Stricter Eligibility Criteria: Additional documentation requirements and verification processes may apply. 

• Limited Lender Options: Not all lenders may approve a personal loan with a 650 CIBIL score. 

You can use a personal loan EMI calculator to understand how higher interest rates will impact your monthly payments and overall loan cost at various tenures. 

Tips to Improve Loan Approval Chances

It is possible to secure a personal loan with a 650 CIBIL score. Consider these strategies to potentially enhance your application, increase approval odds, and secure better terms: 

• Maintain Timely Repayments: Consistently paying your EMIs and credit card bills on time demonstrates financial discipline and positively impacts your credit score. 

• Reduce Credit Utilisation: Keep your credit card balances below 30% of the available limit. High utilisation can signal financial strain to lenders. 

• Provide Comprehensive Income Proof: Submit recent salary slips, bank statements, and tax returns to showcase stable income, reassuring lenders of your repayment capacity. 

• Maintain a Low Debt-to-Income Ratio: A lower ratio indicates that a smaller portion of your income goes towards debt repayment, suggesting better financial health. 

• Limit New Credit Applications: Frequent credit inquiries can negatively affect your score. Apply for new credit only when necessary. 

• Include a Co-Applicant or Guarantor: Adding someone with a stronger credit profile can enhance your application's credibility and improve approval chances. 

• Offer Collateral: Secured loans, backed by assets like property or fixed deposits, can be easier to obtain and may come with better terms. 

• Avoid Frequent Loan Applications: Multiple applications in a short period can be perceived as desperation and may lower your credit score. 

• Keep Older Credit Accounts Active: Long-standing accounts contribute positively to your credit history, enhancing your score over time. 

• Regularly Monitor Your Credit Report: Check for inaccuracies or fraudulent activities and dispute any discrepancies promptly to maintain an accurate credit profile. 

Implementing these practices can gradually improve your creditworthiness, increasing your chances of loan approval even with a 650 CIBIL score.

Yes, it is possible to obtain a credit card with a 650 CIBIL score. While this score is considered fair, options may be limited. However, by making informed application choices and understanding available options, you can increase your chances of approval. 

Credit Card Types for Fair Scores

If your CIBIL score is around 650, consider the following types of credit cards:

• Secured Credit Cards: These cards require a fixed deposit as collateral. The credit limit is often a percentage of the deposit amount. They are suitable for individuals looking to build or rebuild their credit history. 

• Entry-Level Unsecured Cards: Some banks offer credit cards with lower credit limits to individuals with fair credit scores. These cards may have basic features and are designed to help users manage credit responsibly. 

• Retail Store Cards: Certain retail stores provide co-branded credit cards. These cards often have lower credit limits and may be easier to obtain. They offer benefits like discounts on purchases at the store. 

What to Expect: Limits, Charges & Conditions

When applying for a credit card with a 650 CIBIL score, be prepared for the following:

• Lower Credit Limits: Expect initial credit limits to be on the lower side. This is a common practice to mitigate risk. 

• Annual Fees: Some credit cards may come with annual fees. However, there are also options available with no annual fee, especially for secured or entry-level cards. 

• Limited Rewards: Credit cards with a 650 credit score may offer limited rewards or cashback. The focus is often on providing access to credit rather than great benefits. 

• Higher Interest Rates: Be aware that interest rates on outstanding balances may be higher compared to cards offered to individuals with higher credit scores. 

How to Improve Eligibility

To enhance your chances of credit card approval with a 650 CIBIL score, consider the following steps: 

• Apply with Your Existing Bank: If you have a long-standing relationship with a bank, they may be more inclined to approve your application, even with a fair credit score. 

• Provide Proof of Stable Income: Demonstrating a steady income stream reassures lenders of your ability to repay. Include recent salary slips or bank statements as proof. 

• Start with a Secured Credit Card: If unsecured credit cards are challenging to obtain, consider starting with a secured credit card. Responsible usage can help improve your credit score over time and help you apply for a credit card of your choice. 

• Limit New Credit Applications: Multiple credit inquiries within a short period can negatively impact your credit score. Apply for new credit only when necessary. 

• Monitor Your Credit Report Regularly: Check your credit report for any discrepancies or errors. Dispute any inaccuracies promptly to maintain an accurate credit history.

Improving a low CIBIL score is achievable within months by adopting disciplined financial habits. While the process requires patience, consistent efforts can lead to significant improvements. Below are actionable strategies to help rebuild your credit score: 

Check Credit Reports Regularly for Errors

Obtain your credit report from authorised bureaus and review it for inaccuracies such as outdated information, duplicate accounts, or incorrect balances. Dispute any discrepancies promptly to prevent them from negatively impacting your score. Regular monitoring ensures your credit history accurately reflects your financial behaviour. 

Keep Older Credit Accounts Active

Maintaining long-standing credit accounts demonstrates a stable credit history. Avoid closing old accounts, as they contribute positively to your credit profile. Lenders favour applicants with a proven track record of managing credit responsibly over time. 

Make Timely Debt Payments

Consistently paying your EMIs and credit card dues on time is crucial. Late or missed payments can significantly lower your score. Setting up reminders or automatic payments can help ensure you never miss a due date. 

Reduce Credit Utilisation Ratio

Aim to use less than 30% of your total credit limit. High credit utilisation signals over-reliance on credit, which can negatively affect your score. By keeping your spending within limits, you demonstrate responsible credit management. 

Avoid Applying for Multiple Loans or Credit Cards

Each application triggers a hard inquiry, which can temporarily lower your score. Frequent applications may indicate financial distress to lenders. Apply for credit only when necessary and after thorough research. 

Diversify Your Credit Portfolio

A healthy mix of secured and unsecured credit accounts shows lenders your ability to manage different types of credit. While it's essential to manage existing credit responsibly, consider diversifying your credit portfolio over time to enhance your score. 

Track Progress with Free Tools

Utilise free personal finance management tools to monitor your spending habits and track your credit score. Financial marketplaces like Bajaj Markets offer specialised apps with Personal Finance Management (PFM) tools. These can provide insights into areas of improvement and help you achieve your financial goals. 

Seek Professional Advice

If you're struggling to improve your credit score, consider consulting with a financial advisor. They can offer personalised guidance and strategies tailored to your financial situation, helping you navigate the complexities of credit repair.

Achieving a CIBIL score above 750 is within your reach with consistent, disciplined financial habits. By focusing on key areas of your credit behaviour, you can steadily enhance your score and unlock better financial opportunities. Below are actionable steps to help you progress from a 650 to a 750+ score: 

Payment Discipline

Paying all dues on time, including even the smallest ones, is crucial. Consistent, timely payments demonstrate reliability to lenders and positively impact your credit score. Set up reminders or automate payments to avoid missing due dates. Remember, a single missed payment can significantly lower your score. 

Credit Utilisation and Credit Mix

Maintain a credit utilisation ratio below 30% to show responsible credit management. Additionally, having a balanced mix of secured (e.g., home or auto loans) and unsecured (e.g., credit cards, personal loans) credit types can enhance your score. Lenders prefer applicants with diverse credit histories, as it indicates the ability to manage different credit products effectively. 

Avoid Settling Loans

Settling loans may seem like a quick fix, but it can negatively impact your credit score. Instead, focus on paying off outstanding dues in full. If you've previously settled loans, work towards clearing them completely and request a No Objection Certificate (NOC) from the lender. This proactive approach reflects positively on your credit history. 

Monitor Your Credit Report

Regularly check your credit report for errors or discrepancies. If you find inaccuracies, raise a dispute with the credit bureau to have them corrected. An accurate credit report ensures that your score reflects your true creditworthiness.

Understanding your CIBIL report is crucial for assessing your credit health. The report provides a detailed overview of your credit history, which lenders use to evaluate your creditworthiness. Below is a breakdown of the key sections in a typical CIBIL report: 

A CIBIL score of 650 is considered fair, but there's room for improvement. With consistent effort, you can raise your score from 650 to 750+ in approximately 3 to 9 months. This timeframe varies based on individual financial habits and the steps taken to improve creditworthiness. By understanding the components of your CIBIL report and implementing the strategies discussed, you can enhance your creditworthiness. Consistent efforts in managing your credit responsibly will lead to better financial opportunities and favourable loan terms.