Today, both consumers and businesses rely heavily on credit. The entire system of credit availability is heavily dependent on the applicant's credit score. The Credit Information Bureau (India) Limited (CIBIL) is one of the most popular credit information companies licensed by the Reserve Bank of India.

A CIBIL score displays a person's creditworthiness based on past credit behavior. It helps lenders assess the risk of providing debts like secured loans, unsecured loans, and credit cards in the credit approval process. The CIBIL score is a three-digit numeric value prior to credit management and repayment history. In most cases, a score of 750 or above is considered good.

To understand if a 650 is a good CIBIL score, you need a better grasp of the credit scores and what they indicate. For the most part, a CIBIL score in the 650–699 range suggests satisfactory or fair creditworthiness, with a possible chance of loan approval.

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What is the CIBIL Score?

Whenever you want to apply for any kind of loan or credit card, you must understand what the CIBIL score is. A CIBIL score is a three-digit figure between 300 and 900 that evaluates your capacity to repay the borrowed funds in time. This three-digit figure acts as a numeric summary of your credit history, rating, and report. You must try to be close to 900, as it is the perfect score. CIBIL acquires data from financial institutions, analyzes the data in order to create reports for every individual, and provides a 3-digit score based on the same.

What Is a Good CIBIL Score?

A credit score above 750 is typically known as an excellent CIBIL score. The range and definition of a good score vary a bit based on the agencies. India has 4 rating agencies, out of which CIBIL is the most commonly referred credit bureau for credit reports and credit scores. Lenders consider borrowers with a good CIBIL score as their perfect lending candidates. Is 650 a good CIBIL score or not? It may depend on the specific requirements and policies of a lender. For most parts, it is a satisfactory credit score, but trying to improve it and getting a score over 750 would improve the odds of having a loan or credit card application approved.

Implications of the CIBIL Score Range

1. 300–549: This is the basic and lowest range for the CIBIL score. It reflects that a person has delayed their loan EMIs and/or credit card bill payments and, therefore, is at a high risk of turning into a defaulter. People with such a CIBIL score should try to explore options for credit cards for low CIBIL scores.

2. 550-649: This CIBIL score range is considered to be fair but also shows that one has been struggling to pay the dues on time. Thinking about how to improve my credit score must be your priority in case your CIBIL score comes under this range.

3. 650–749: This CIBIL score range shows that one has good credit behavior. Hence, the answer to the question—is 650 a good CIBIL score?—is yes. Individuals with a CIBIL score in the 650-749 range would have a good chance of getting a credit card or loan approval, but they may not get the best interest rate.

4. 750–900: A CIBIL score above 750 is known to be excellent. It shows that one has an impressive payment history and has paid their dues in a timely and consistent manner. People with a CIBIL score of 750 to 900 are considered to be at the lowest risk of turning into a defaulter, and therefore, lenders are prone to providing them loans without any hassle, that too, at lower interest rates.

Also Read: Is 720 a Good CIBIL Score?

Is 650 a Good CIBIL Score?

A CIBIL score of 650 is a decent credit score. It serves as an indication that you do manage your credit well, but there is also room for improvement. With such a CIBIL score, you are quite likely to qualify for credit cards and personal loans but may not get as favorable terms as applicants with higher scores. Moreover, your credit cards and loans may come with strict terms and high interest rates. Hence, unless you need to take out a loan urgently, you must try to focus on how to increase your credit score quickly. Improving the CIBIL score can help you enjoy better financial opportunities and terms.

Impact of CIBIL score of 650

There are both positive and negative implications of having a CIBIL score of 650. These are discussed below:

The Positives

1. Eligibility for secured credit products

2. Access to a variety of credit products

3. Good potential for loan approvals

4. Foundation to build a better score

The Negatives

1. Higher interest rates

2. Less favorable loan terms

3. Increased scrutiny from lenders

How do I Improve My CIBIL Score?

Having a good CIBIL score facilitates access to expanded credit opportunities, lower interest rates, and better loan conditions. You need to adopt a range of responsible financial practices and make use of strategic credit management strategies to improve your CIBIL score. Understanding how to improve your CIBIL score and following those tips would help you optimize your CIBIL history and overall report, and thus, you can enjoy the freedom of robust credit standing.

Also Read: What is the Use of CIBIL Score?

Here are a few tips to improve your CIBIL score:

Repay your debts on time: No matter whether it is your loan EMIs or credit card bills, it is vital that you repay the debts in a timely manner. Missing out on repaying any kind of outstanding debt will impact your credit rating. One must try one's best to pay loan EMIs in time, as failing to do so will not only impact credit scores negatively but also incur penalties. You can set reminders or an autopay option in your payment gateway systems to remind you to pay debts on time. You may even have an automatic payment system in place so that the EMI amount is debited from your savings account directly each month.

Do not take on multiple loans: People trying to improve their CIBIL score must avoid taking on multiple loans at the same time. It is important to make sure that all old debts have been cleared before applying for a new loan. This would prevent the CIBIL scores from reducing. If a person takes on multiple loans simultaneously, it would show the lender that the applicant may not have enough funds to repay all of them in a timely manner. On the other hand, if you just have a single loan to repay, the lenders are likely to feel more confident in approving your loan, and your CIBIL scores will be untouched.

You must maintain a healthy credit mix: People apply for loans to fund diverse necessities of life, like a new home, the higher education of a child, and so on. However, when taking on a loan, you should try to ensure that you have a healthy mix of secured and unsecured loans. Car loans and home loans ideally count for a secured loan, while personal loans and credit card debt would be considered unsecured loans. You must maintain a balance between both, as taking any single type of loan in excess can impact your credit score.

Also Read: How Students with No Income Can Get a Credit Card

Do not utilize your entire credit limit: Credit limit utilization is important for improving credit scores. Not utilizing credit cards to the extreme limit lenders provide is among the easiest and fastest ways to improve credit scores. People should try to spend just 30% of the credit limit provided on their credit card per month. For example, if they have a credit limit of ₹200,000 per month, it would be best to restrict the monthly credit spending to just ₹60,000. In case one does exceed the 30% limit, potential lenders may get the impression that the spending limit of the applicant is impulsive, which may invariably lower the CIBIL score.

You must extend your credit limit: If your CIBIL score shows good repayment behavior, there is a chance that your bank will contact you to extend your credit limit. You must not turn down this increased credit limit. Increasing the credit limit does not mean that you have to increase your credit card spending. Basically, the idea is to have a high credit limit but limit your credit utilization in order to improve the CIBIL score.

Make sure that your credit report is error-free: You may believe that your credit report is accurate and free of errors. However, there are instances where multiple errors lower the credit score of a person. For example, a person might have paid off their personal loan in full, but there might be some unpaid administrative errors. Hence, it is wise to check the credit score from time to time and make sure that it is error-free before applying for a loan.

How To Check My CIBIL Score?

To check your CIBIL score, you can visit the official site of either ZetApp or CIBIL. To do so, you will have to:

1. Visit https://www.cibil.com/creditscore or ZetApp.

2. Navigate to the section for checking the score.

3. Fill in the required details, like mobile number, PAN number, etc.

4. Proceed to the next steps as instructed.

5. Check your CIBIL score.

CIBIL score is the most important asset of a debtor. It is a tool for a large number of credit products, though you may not get favorable loan terms and low interest rates. To improve the terms of the credit, you should try to improve your CIBIL score as well. A good CIBIL score is an indicator of good financial health.

FAQs

What is the difference between a credit report and a credit rating?

A credit report pertains to individuals and is issued by one of the four credit bureaus in India: CIBIL TransUnion, Experian, Equifax, or CRIF High Mark. On the other hand, a credit rating is relevant to companies and is provided by rating agencies like CRISIL, ICRA, and others.

How does the credit score help in filing loan applications?

A high credit score, ideally above 750, would imply that you have impressive financial discipline and pay off your dues on time. Such a score will increase your odds of being approved for additional credit in the form of a new credit card or loan.

How is my credit score calculated?

Credit score calculations rely on information from four main sections of your credit report: your payment history on past credit, the number of active accounts, and your credit-to-debt ratio. These primary factors affect one's credit score and are reflected in your credit report.

How often can my credit score change?

Ans. Your credit score fluctuates based on updates to your credit report. Consequently, your score may change as new credit information is added or removed, such as the opening or closing of a credit card or loan account. Banks and other financial institutions should report this information to credit bureaus on a monthly basis.

Will a bounced cheque reduce my CIBIL score?

Ans. No, a bounced cheque does not impact your CIBIL score. However, if you miss any EMI or loan repayment schedule, it will definitely affect the credit score you have achieved.

Can I take a personal loan with a credit score of 650?

Ans. Yes, if you have a CIBIL score of 650, it will be considered a fair score. You can apply for a personal loan with this. But you might not get the best deal with this score. Still, you will be considered a trustworthy debtor who can repay his or her loan on time.

Can I get a car loan with a CIBIL score of 650?

Ans. A good CIBIL score range can give you easy access to car loans. The good CIBIL score range is from 650 to 749. So, you can get a car loan with a CIBIL score of 650. However, there is no minimum score to apply for a car loan. It is advised to maintain at least a 650 score before applying for a car loan. It will give you loans at lower interest rates.