A bad credit score is something that should be fixed over time. On the other hand, a good credit score opens great opportunities in your financial journey. A credit score allows the lender to assess the borrowers financial capabilities. Credit Score plays an important role in getting a loan sanctioned at the time of applying for it. Be it a personal loan, home loan, or credit card, the first thing a bank or lenders will check for is your credit report. But the big question here is: What is a bad score? And, above all, what should be done if one has a low credit score?
In this guide, we will explain a bad credit score in India, whether a 620 credit score is considered good or bad, the effect of a low credit score on loans, and the realistic availability of a loan for a bad score individual in India.
What Is A Bad Credit Score?
The credit score in India normally ranges from 300 to 900. The higher the score, the better is your creditworthiness.
Knowing what comprises a bad score, let’s delve into the general classification used by lenders.
| Credit Score Range | Category | Meaning |
| 750 – 900 | Excellent | Very low risk borrower |
| 700 – 749 | Good | Low risk |
| 650 – 699 | Fair | Moderate risk |
| 600 – 649 | Poor | High risk |
| 300 – 599 | Very Poor | Very high risk |
A score that is below 650 is considered risky. Most banking institutions require scores to be at least 700 and above. In defining a bad score, we can say that it is a score below 650.
620 Credit Score: Good or Bad?
A commonly asked query is: is a credit score of 620 good or bad?
In India, the credit score of 620 falls under the “poor” category. Although the score is not the worst, it is still considered risky by most banks.
Here’s what your score of 620 typically means:
- You might have missed making payments earlier.
- You may have high credit card utilization.
- You have settled and written off accounts.
- You might have limited credit history.
So, in case you are wondering whether your credit score of 620 is good or bad, here is the answer: it is considered an average credit score and might result in your loan being rejected.
Why Do Lenders Consider Bad Scores Risky?
To get an idea of what a bad score is, it is important to know what lenders think.
Banks as well as NBFCs consider your credit score as an aspect. When your credit score is low, it means:
- Past Late EMI Payments
- Defaults
- Loan settlements
- Many loan requests
- High debt burden
From the perspective of the lender, these factors raise the risk of default.
That is why there may be stricter approval criteria for applicants with low scores.
Impact of a Bad Credit Score:
If your credit score is under the category of bad score, you may experience the following:
1. Loan Rejection
The range of the credit score depends on lender to lender. But many traditional banks or lenders have a minimum credit score requirement of 650. Borrowers below this credit score may face loan rejection problems in their application.
2. Higher Interest Rates
Someone with a good credit score will be able to avail lower interest rate charges. As it is easier for the lender to trust and believe them and provide low interest rates. Whereas, some with a bad score, the interest rates may be significantly high.
3. Lower Loan Amount
Due to a bad score, there are high chances for the lender to provide you with a lower amount compared to what you demanded for. A low credit score is an indication of the borrower’s ability to repay the amount.
4. Stricter Terms
A bad score results in shorter tenure and more documentation, which can get difficult for you as a borrower to repay the amount in shorter tenure.
5. Difficulty Getting Credit Cards
A bad score doesn’t allow you to have access to the premium offers and discounts provided by the banks or lenders. Hence, premium cards are usually unavailable.
Example Of Interest Difference:
To make it more understandable, let’s consider two borrowers who want to apply for a personal loan of ₹5 lakhs for 3 years.
| Credit Score | Interest Rate | EMI (Approx) | Total interest paid |
| 780 | 11% | ₹16,370 | ₹89,320 |
| 620 | 18% | ₹18,070 | ₹1,50,520 |
As mentioned above, it is possible that a borrower with a credit score of 620 may end up paying almost ₹61,000 more. This example confirms that there are indeed financial implications of having a credit score that is considered a bad score.
Can You Get a Loan with a Bad Credit Score in India?
Yes, but the options are limited and often come with certain conditions.
If you are looking to get a loan on bad scores in India, here are some possibilities:
1. NBFC Personal Loans
NBFCs can approve loans for 600 to 650 credit scores at a higher rate of interest.
2. Secured Loans
Loans against gold, property, or a fixed deposit are easily accessible as the risk is lower for the lender.
3. Small Ticket Loans
However, platforms like Olyv facilitate short-term or small-loan loans depending on the terms and conditions of the lender
4. Co-Applicant Loans
Applying with a Co-Borrower with a Good Score Helps.
5. Salary-Based Eligibility
Sometimes a stable income can make up, to a degree, for a poor score
However, it is also important for the borrowers to compare interest rates and repayment capacity.
How long does it take to improve a 620 score?
If you are wondering again whether a 620 credit score is good or bad, keep in mind that although it is rated as poor credit, it is not permanent.
Paying off responsibility with discipline:
- Minor late payments can recover in 6–12 months.
- Major defaults may take 12–24 months.
- Consistent on-time payments steadily improve score.
Improvement depends upon financial discipline.
Key Takeaways:
Now, let’s summarize
- What is a bad credit score? Typically below 650 in India.
- 620 good or bad? It is bad for most banks and is risky.
- Low scores mean higher interest rates and tougher loan terms will apply.
- Bad credit score applicants in India may be able to get a loan, though not without cost.
- Increasing your credit score prior to obtaining credit could prove financially more beneficial.
Final Thoughts On A Bad Credit Score:
Understanding what constitutes a bad score will help you make informed financial decisions. A low credit score does not mark the end of your borrowing journey; it calls for careful planning.
If you have been asking whether a 620 credit score is good or bad, now you know that it falls into the risky category. While options do exist for a loan for a bad score in India, they often mean higher interest rates and more strict conditions.
The long-term best road to take is rebuilding your credit steadily. Responsible repayment today opens better financial opportunities for you someday.
