HEY, what is a bad credit score?
A bad credit score means your creditworthiness is low in the eyes of lenders. In India, credit scores usually range from 300 to 900. However, if your score is below 600, it is a bad credit score.
With such a score, banks and NBFCs view you as a higher-risk borrower, which often results in loan rejections, credit card denials, or higher interest rates.
My banker friend said once that a poor CIBIL score is usually a sign of poor financial behaviour, such as:
- Missed credit card bill payments.
- Delayed bill payments.
- Defaulting on EMIs.
- Exhausted your credit limit.
- Applying for too many loans in a short time.
Even a single missed credit card payment can pull your score down quickly.
For instance, I once overlooked a couple of credit card bills while travelling last year. Within months, my score dropped from 749, and when I tried to apply for a car loan, I either faced rejection or got unfavourable terms.
That experience was enough to teach me how important timely payments and maintaining discipline while using credit cards are.
The silver lining? A bad credit score isn’t permanent. By repaying dues on time, maintaining a low credit utilisation ratio (ideally below 30%), and reviewing your credit report periodically, you can improve your score again and regain financial credibility.