685 Credit Score: Is It Good or Bad?

A credit score of 685 indicates a reasonably stable financial history but with room for improvement. While it does not hinder your access to new credit, it may lead to higher interest rates or reduced loan amounts. Understanding how a 685 score is evaluated and taking proactive steps to improve it can pave the way to better opportunities.

 

In India, credit scores are calculated by the 4 major credit bureaus - TransUnion CIBIL, Equifax, CRIF High Mark, and Experian. The score may represent a different financial status depending on the bureau which generates it. A 685 credit score typically reflects consistent financial habits with occasional lapses. These could include missed payments or high credit utilisation. Here’s everything you need to know about a score of 685.

Credit bureaus in India classify credit scores using distinct ranges and methodologies. Here’s what a 685 credit score signifies across bureaus:

Although a 685 credit score reflects financial reliability, lenders may still impose slightly higher interest rates or limit loan amounts compared to borrowers with excellent scores.

A 685 credit score opens the door to various financial products but comes with certain restrictions. Here’s how it impacts your financial prospects:

Higher Loan Approval Rates

Lenders are more likely to approve loans for borrowers with a 685 CIBIL score compared to lower scores. However, loan terms may still include higher interest rates or shorter tenures.

Moderately Competitive Interest Rates

While you may qualify for loans, the interest rates are likely to be higher than those offered to borrowers with good or excellent scores. This increases the overall cost of borrowing.

Limited Access to Credit Cards

You can qualify for basic or secured credit cards, but premium cards may still be out of reach.

Moderate Insurance Premiums

Insurance providers may offer moderate premiums, viewing a 685 CIBIL score as indicative of average risk. Improving your score can help you secure lower premiums.

Easier Rental Approvals

With a 685 score, you are likely to secure rental property agreements more easily compared to those with lower scores. However, landlords may still scrutinise your financial history in competitive markets.

Better Negotiation Power

A 685 score offers moderate negotiation power. This allows you to secure slightly better terms on loans or credit cards. The higher the score the better your chances of getting favourable terms through negotiations.

Minimal Employer Concerns

Certain employers, especially in industries like finance, may review credit scores as part of background checks. A 685 score is unlikely to raise significant concerns.

With consistent effort, a 685 CIBIL score can easily move into the 700 - 900 range. Here’s how you can achieve that:

Pay Your Dues on Time

Timely payments are the most critical factor in improving your credit score. Automate payments or set reminders to avoid missing due dates for credit cards, loans, or utilities.

Don’t Max out Your Credit Cards

Keep your credit card balances lower than your actual credit limit. Aim for a credit utilisation ratio of below 30%. For example, if your total limit is ₹1.5 lakh, keep your outstanding balances under ₹45,000.

Avoid Frequent Credit Applications

Each credit application results in a hard inquiry, which can temporarily lower your score. Apply for new credit only when necessary and manage existing credit responsibly.

Regularly Check Your Credit Report

Monitor your credit report for discrepancies, such as unrecognised accounts or inaccurate late payments. Dispute errors promptly to protect your score.

Pay Your Debts Strategically

Reduce high-interest debts to improve your debt-to-income ratio. This positively impacts your score and provides financial relief.

Maintain a Diverse Credit Portfolio

Having a mix of credit types, such as secured loans, personal loans, and credit cards, demonstrates responsible financial behaviour. However, avoid taking on unnecessary debt.

Avoid Closing Your Old Credit Accounts

Older credit accounts with positive histories contribute to your credit age. Avoid closing these accounts unless absolutely necessary, as they add stability to your credit profile.

Use a Secured Credit Card

If premium credit cards are unavailable, opt for a secured credit card linked to a fixed deposit. Use it responsibly to rebuild and improve your credit score.

Seek Expert Advice

A financial advisor can provide personalised strategies to help you address weaknesses in your credit profile and achieve a better score.

A 685 credit score signifies fair creditworthiness, offering reasonable access to financial products with some limitations. By addressing key areas such as timely payments, lowering credit utilisation, and maintaining a diverse credit mix, you can transition into the good credit range. With focused efforts and financial discipline, better credit terms and financial opportunities are within reach.