Why do credit scores start at 300? Why not anything less or more?
Credit scores in India start at 300, not zero. Because the scoring system needs a baseline to measure your credit behaviour. A score of 300 represents the lowest end of the range, while 900 is the highest in India.
A person with a 300 credit score shows lenders that they are a high-risk borrower. It shows:
- Poor Creditworthiness: A score of 300 is the lowest possible score in India’s 300-900 range.
- Poor Financial Habits: It is a clear sign of past credit issues, often due to defaults or missed payments, high credit utilisation, etc.
- Loan Rejection and Unfavourable Terms: If you apply for new credit cards or loans, there is a high chance of loan rejection. If a lender does approve you, it will likely be with very high interest rates and unfavourable loan terms.
Don’t worry! With consistent, responsible financial habits, your credit score can move up quickly.
Another possible reason to see a score of 300 is if you’re a complete newbie to credit. That means you haven’t used any loans or credit cards yet, or you’ve just started your credit journey.