648 Credit Score: Is It Good or Bad?

A credit score of 648 puts you in the fair category, signalling a balance between responsible financial behaviour and areas needing improvement. While it doesn’t disqualify you from accessing credit, it does limit the options and terms you might receive. By understanding its implications and focusing on key areas of improvement, you can set yourself on a path to better financial opportunities.

 

In India, credit scores calculated by TransUnion CIBIL range from 300 to 900. A 648 score typically reflects a history of partial financial responsibility. It reflects occasional missed payments, over-reliance on credit, short credit history, etc. With some focus and effort, this score can be increased to unlock better terms for loans and credit cards.

Every credit bureau uses its own criteria and scoring range, which can influence how your 648 score is categorised. Here's what this score signifies across bureaus:

A fair credit score like 648 affects your financial prospects in several key ways:

Limited Chances of Loan Approvals 

Loan applications are less likely to be rejected outright, but lenders may approve smaller amounts or require collateral. Loan terms may also be more stringent.

Higher Costs of Borrowing

Interest rates are likely to be on the higher side. This means borrowing costs more, particularly for unsecured loans like personal loans or credit cards.

Limited Credit Card Benefits

You may qualify for entry-level credit cards with basic features. Premium cards offering travel rewards or cashback perks may not be accessible with this score.

Increased Scrutiny by Insurers

Some insurance companies check credit scores when determining premiums. A fair score might lead to higher policy costs as insurers associate it with greater financial risk.

Difficulty in Securing Rental Agreements

Landlords, especially in competitive rental markets, often view credit scores as a measure of reliability. A 648 CIBIL score may require you to provide additional references or guarantees.

Limited Negotiation Power

With a fair score, negotiating better terms for loans, like reduced interest rates or longer repayment tenures, is challenging.

Potential Employer Concerns

While rare, some employers in sectors like finance or security may assess credit scores as part of background checks. A CIBIL score of 648 might raise questions about financial reliability.

Improving a credit score from fair to good takes focused action. Here’s how you can build better credit over time:

Focus on Timely Payments

Making consistent, timely payments on credit cards, loans, and utilities is essential. Payment history accounts for a significant portion of your credit score calculation.

Optimise Credit Usage

Keep your credit card balances low relative to their limits. A utilisation ratio under 30% is ideal to demonstrate responsible credit management.

Avoid Unnecessary Credit Checks

Each time you apply for a loan or credit card, a hard inquiry is recorded. Minimising new applications prevents temporary dips in your score.

Regularly Monitor Your Credit Report

Errors in your credit report, such as misreported late payments, can drag down your score. Reviewing your report ensures accuracy and helps you address discrepancies swiftly.

Pay off Your High-interest Debts

Paying down debts with high interest rates not only saves money but also improves your debt-to-income ratio, which can positively influence your score.

Diversify Your Credit Types

A balanced credit portfolio (e.g., a mix of credit cards, personal loans, and secured loans) demonstrates financial stability. Adding a secured credit card could also help rebuild credit responsibly.

Leverage Older Accounts

The age of your credit history matters. Keeping older accounts open and in good standing contributes positively to your score.

Consider Professional Guidance

A financial advisor or credit counsellor can provide tailored strategies for improving your score based on your financial situation.

A 648 credit score represents fair creditworthiness, offering some access to credit products but with limitations. By addressing specific areas, such as timely payments and reducing credit utilisation, you can improve your score and unlock better opportunities. With consistent efforts and a proactive approach, achieving a higher credit score can become a realistic goal.