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Explore tips to rebuild your credit score. Learn how timely payments, lower credit use, and smart habits can improve your financial health.
Last updated on: January 16, 2026
Here are some key disadvantages:
With a bad credit score, your options are limited to basic or secured cards. You also miss out on premium cards that come with better benefits and rewards.
Lenders usually charge higher interest rates to those with low credit scores. This can make borrowing more expensive and repayment harder.
With a poor credit history, rewards like cashback, discounts, or travel points are often unavailable. This reduces the value you get from using credit.
Many lenders reject applications from people with low credit scores. They see it as a sign of higher repayment risk.
Even if you qualify for credit, your limit will usually be much lower. This restricts your spending power and flexibility.
Some landlords review credit scores before leasing homes. A bad score may make it difficult to secure a rental agreement.
Certain employers, especially in finance, check credit history before hiring. A weak score can reduce your chances of getting the job.
In urgent situations, a low score may stop you from getting quick loans. This makes handling financial emergencies more stressful.
Lenders may insist on a guarantor or co-borrower for loan approval. This adds extra dependence and makes the process more complex.
Not being able to access affordable credit can create constant worry. It also limits your ability to plan for future needs.
Insurers sometimes factor in credit scores while setting premiums. A poor score can raise your costs, while a strong one keeps them low.
Premium cards with high rewards are usually given to people with strong credit profiles. With a weak score, you lose access to these exclusive perks.
Lenders may ask for additional collateral or security (such as property, fixed deposit or guarantor) to approve loans if your score is low.
Even if a loan is approved, you may receive stricter terms such as shorter repayment tenures or higher monthly instalments, making repayment more burdensome.
Poor credit can make it harder to obtain car loans or two‑wheeler financing; and if granted, such loans often come with higher interest rates and less favourable terms.
Some financial products like certain types of insurance, business loans or NBFC‑backed loans may remain out of reach or come with unfavourable terms if your score is low.
With a low score, loan applications often undergo more scrutiny, which can lead to longer approval processes, more paperwork or repeated documentation requests before sanction.
A bad credit score indicates poor creditworthiness, reflecting your repayment history, credit utilisation, and overall financial behaviour. Lenders consider individuals with low scores as high-risk borrowers, which makes securing loans or credit approvals more difficult.
In simple terms, having bad credit means your past financial behaviour may not inspire confidence in lenders. In India, credit bureaus like TransUnion CIBIL, Experian, Equifax, and CRIF High Mark use their own scoring models. This leads to slight differences in what qualifies as a “bad” score.
While the ranges vary, scores below a certain threshold across all bureaus generally fall into the bad credit category. The following table shows the score ranges for each bureau:
| Credit Bureau | Score Range | Bad Credit Score Range |
|---|---|---|
TransUnion CIBIL |
300 - 900 |
Below 550 |
Experian |
300 - 850 |
300 - 579 |
Equifax |
300 - 900 |
300 - 579 |
CRIF High Mark |
300 - 900 |
Below 550 |
| Category | No Credit History / “-1” or NH | Very Recent Credit History / “0” Score | Low Credit Score |
|---|---|---|---|
What it means |
You have never taken a loan or used a credit card; there is no credit history recorded. |
You have recently availed credit (loan or card), but history is too short or insufficient for a proper score. |
The credit bureau has recorded negative marks — such as missed payments, high utilisation, defaults, or poor credit habits — leading to a poor score. |
Typical cause |
No prior credit usage, which means you simply haven’t taken credit yet. |
First-time credit usage; credit history under six months. |
Past credit mismanagement: late repayments, defaults, high credit utilisation, missing credit‑mix, etc. |
Implications (for lenders / you) |
Lenders lack data to assess creditworthiness; approvals may be delayed or require extra checks (income, collateral, guarantor). |
Lenders still lack enough history; you may get credit but often under stricter scrutiny or with higher interest/privacy of terms. |
You’re perceived as high-risk: loans/credit card applications may get rejected, or when approved — rates, limits, and benefits will be less favourable. |
Ease of building or improving credit |
Easiest because once you use credit and repay responsibly, you begin building history and a proper score within a few months. |
Relatively easy as it is consistent on‑time repayments and low credit usage over next months can convert your profile into a normal credit history. |
Harder as it requires disciplined repayment, reduction of outstanding debts, lower credit utilisation and time for recovery. Improvement is gradual. |
Here are some of the common factors and bad practices that can lead to a poor credit score:
Late or missed payments on credit cards, loans, or utility bills can lower your score significantly. Payment history is one of the most crucial factors in determining creditworthiness.
Ignoring your credit score can prevent you from identifying errors or fraudulent activities in your credit report, which could negatively impact your score.
Using a large percentage of your available credit limit shows over-dependence on credit. A utilisation rate above 30% can harm your score.
Defaults have a severe and long-lasting impact on your credit score, making it difficult to regain financial trustworthiness.
Each application results in a hard inquiry, which can reduce your score temporarily. Multiple inquiries within a short span can make you appear desperate for credit.
Depending solely on one type of credit, such as personal loans, without managing a mix like credit cards or secured loans, can affect your score.
Closing long-standing accounts reduces the average age of your credit history, which can negatively impact your score.
Mistakes on your credit report, such as incorrect personal information, unrecorded payments, or duplicate accounts, can unfairly lower your score. If these errors are not disputed and corrected, they may continue to negatively impact your creditworthiness.
Consistently carrying overbalances on your credit card without paying them in full can increase your credit utilisation ratio and reduce your score.
Loan settlements, where the lender agrees to accept less than the full amount owed, are noted in your credit history and can lower your score significantly.
Here are some effective tips to boost your credit score:
Timely payments on loans, credit cards, and utility bills are essential for improving your credit score.
Aim to use less than 30% of your available credit limit to show responsible credit usage.
Review your credit report to identify and correct errors or discrepancies that may negatively impact your score.
Pay off overdue loans or credit card balances to reduce your debt burden.
Space out your credit applications to prevent hard inquiries from lowering your score.
Have a balance of secured and unsecured loans to demonstrate your ability to manage different types of credit.
Keep your oldest accounts active to maintain a longer credit history, which positively affects your score.
Using a secured credit card responsibly can help rebuild your credit score over time.
If you are struggling with repayments, discuss restructuring options with your lender instead of defaulting.
Reviewer
Typically 700–900 is considered good. Scores above 750 improve chances of fast loan approval and lower interest rates.
While immediate improvement is not possible, you can take steps such as paying off outstanding dues and correcting errors in your credit report. Reducing your credit utilisation ratio can also help you see gradual improvements.
A poor credit score can lead to loan rejections and higher interest rates. It can also limit credit card options and make it difficult to rent property or secure employment in certain sectors.
Difficulty in accessing loans or credit cards
Higher borrowing costs due to increased interest rates
Limited financial flexibility during emergencies
Reduced credit limits on approved loans or cards
Negative impact on future financial opportunities, like buying a home or a car
The biggest disadvantage of credit is the potential to accumulate debt if it is not managed responsibly. High interest rates and late payment penalties can lead to financial strain and a poor credit score.
A low CIBIL score in India is usually below 550–600. It shows missed payments, defaults, or weak credit history. A score between 550–649 is fair, while 700 and above is good to excellent.
The lowest credit score in India is 300. It falls in the very poor range. Such a score often leads to loan rejections and very limited access to credit.
The time varies by situation. Minor corrections (like reducing utilisation or fixing errors) may show improvements in 3–6 months. Defaults or settlements may take 12–24 months of consistent repayment to recover.
Yes, but approvals are limited. Lenders may require a higher down payment, proof of income stability, or a co-borrower. Secured loans are easier to get than unsecured ones.
You can check it online through portals like CRIF Highmark. Register with your details, verify your identity, and access the report on the dashboard.
It is possible, though lenders may apply stricter terms. A higher down payment, proof of financial stability, or a co-applicant can improve your chances.
Yes, debt consolidation can improve your credit score if handled carefully. It makes payments easier, lowers interest costs, and provides a structured repayment plan. A short-term dip may occur due to hard inquiries, and taking on new debt can reduce the benefits.
No, checking your own score is a soft inquiry and does not reduce it. Only hard inquiries made during credit applications can cause a temporary drop. Regular monitoring is safe and helps you stay informed.
If you frequently face loan or credit card application rejections, are offered loans at high interest rates, or receive only low credit limits, these are strong indicators of a poor credit score. Other warning signs include regular late or missed payments, maintaining high outstanding balances, and repeated denials for financial products. Together, these patterns suggest your credit score may be low and needs attention.
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