600 Credit Score: Good or Bad?

An overview of what you can do with a 600 credit score

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    When it comes to financial jargon, the credit score is a fairly common one. This three-digit number, which varies from 300 to 900, represents your creditworthiness. It helps banks and other financial institutions to gauge your capacity to repay debts.
    In simple terms, a credit score is one of the most crucial parameters lenders consider before approving your loan application. Thus, it is essential to know this score before applying for credit.

    What Does a 600 Credit Score Means?

    If you are wondering whether a 600 credit score is good or bad, then the answer would be more inclined to the latter aspect of this question.

    With reference to the table mentioned above, the 600 credit score comes under the category of low and with 2 stars. Hence, it needs urgent care and proper financial planning to up this score for future benefits.

    However, if you talk about the current scenario with a credit score as low as this, it will be difficult to secure credit. Moreover, you may have to agree to some unfavourable loan terms to get financial assistance. This can include high-interest rates, greater down payment (for secured loans), stringent repayment terms, etc.

    Factors Affecting Your Credit Score Negatively

    Here are some factors that can have an adverse effect on your credit score –

    Non-Payment of Dues on Time

    Not paying the dues on time can affect your credit score adversely. This includes existing EMIs, credit card dues and multiple loans. 

    Applying for Multiple Loans at Once

    If you apply for multiple loans at once, it can affect your credit score as well. The reason is that once you file a credit application, the lender places a verification request with the credit bureaus, known as hard queries. Now, each hard query reduces the credit score by a small margin and multiple ones can do it significantly.

    Maintaining a Poor Credit Utilisation Ratio

    If you keep overshooting beyond your ideal credit limit, it will be detrimental to your credit score in the long run. The reason behind this is, here, you will create a perception of being an irresponsible borrower.

    Failing to Maintain a Healthy Mix of Credit

    According to experts, if you can maintain a mix of secured and unsecured loans in your credit portfolio, that is ideal. Now, taking up different credit options and closing them successfully creates an impression of a responsible borrower. Hence, that reflects on your credit score as well.

    Closing Old Credit Cards

    Closing old credit cards is another way of hurting your credit score. Since this credit instrument carries a long transaction and repayment history, closing them will delete that from the system. Hence, you will lose a few points on your credit score.

    How to Improve Your Credit Score?

    Here are some tips to improve your 600 credit score –

    • Making timely repayments
    • Maintaining a low credit utilisation ratio
    • Not applying for multiple loans at once
    • Varying the credit portfolio helps
    • Resolving any discrepancies in the credit report
    • What Can You Get with a 600 credit Score?

    Now, a credit score is something that you cannot increase overnight. However, the financial emergencies will not wait for you to resolve this. Therefore, it is imperative to understand the financial services you can get with your current credit score, i.e. 600 and plan accordingly.

    Here are a few common questions explained to help you get a better understanding –

    Can You Get Credit Cards with a 600 Credit Score?

    Yes, there are credit cards for a 600 credit score. However, there must be some limitations in terms of its usability. For instance, you may not get a high credit limit, or the interest rate and penalties as well as non-repayment may be higher than usual.

    So, go through the terms of service before accepting one.

    Can You Get a Personal Loan with a 600 Credit Score?

    Absolutely, you can secure a personal loan with this credit score. However, depending on the financial institution, the loan amount and terms of credit may differ, i.e. they may be stringent or relaxed.

    Can You Get Home loans for a 600 Credit Score?

    Yes, you will be able to secure a home loan with this credit score. However, the terms of the loan may not be very favourable. You may end up paying the loan at a higher interest rate and against non-flexible repayment terms. 

    Can You Get an Auto Loan with a 600 Credit Score?

    Yes, you can get an auto loan with this 600 credit score. But do not forget to check the loan terms before agreeing.

    Can You Get Insurance Plans with a 600 Credit Score?

    Yes, you can get an insurance policy, be it life, health or general, with this credit score.

    As evident from the above sections, a 600 credit score is not a desirable choice for most banks and financial institutions in UAE. However, taking a few measures can help you reach a higher position and avail your desired type of credit at ease.

    Frequently Asked Questions

    Who calculates credit scores in the UAE?

    In the UAE, Al Etihad Credit Bureau or AECB is responsible for calculating the credit scores of individuals.

    What factors affect the calculation of credit score?

    While calculating this score, the regulatory body considers various factors. These include the bill payment history of an individual, his/her debt level, credit history age, total credit enquiries and the type of credit account.

    What is the best credit score in UAE?

    In the UAE, a credit score exceeding 700 is considered good. With such a score, you can easily obtain loans at a lower interest rate.

    Can I add a co-borrower to obtain a loan with a low credit score?

    Yes, you can add a co-borrower with a healthy credit score to meet the eligibility parameters of a lender.

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