What Does a 640 Credit Score Mean?

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When seeking to obtain a new loan or a credit card, one may often get stuck in a dilemma about whether a 640 credit score is good or bad. With credit score being a crucial factor regarding the approval or rejection of your application, having such doubts is natural. 

To find out whether a 640 credit score is good or bad, its impact on your chances of getting your preferred financial product, as well as steps to improve upon your score, continue reading below.

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640 Credit Score – An Overview 

Determining the creditworthiness of an individual is one of the primary criteria that must be fulfilled to qualify for a loan or new credit card in the UAE. For this purpose, the al etihad credit bureau (AECB) produces credit scores and credit reports for each citizen of the country, which includes both nationals and ex-pats. 

Credit scores span between the lower and upper extremes of 300 and 900, respectively. As per the norms followed in the UAE, a credit Score between 541 and 650 is considered a low credit score. Thus, a 640 credit score would be a low credit score and equivalent to a rating of 2 stars out of 5. 

If an individual possesses a credit score of 640, they may find it challenging to have banks and other financial institutions approve their loan and credit card applications. Moreover, there are high chances that you will be charged a higher interest rate even if your product is approved with such a low score.

What Can a 640 Credit Score Get You?

As mentioned earlier, having a credit score of 640 can often make it difficult for you to get the card or loan product of your choice. Having said that, one may still find several options provided they find higher interest rates acceptable. 

This section will discuss whether a 640 credit score is good or bad for loans, credit cards, as well as insurance. 

Credit Cards for 640 Credit Score

As 640 is a low credit score, banks may or may not accept your request for a credit card, depending on their eligibility criteria. In case your request is accepted, you may still be charged with higher interest rates. 

In situations where your application is rejected, you can apply for a secured credit card where you will be required to deposit a certain amount with the bank when opening the account. This amount acts as collateral for your credit card in case you fail to make the credit bill repayments on time. 

Personal Loan for 640 Credit Score

Applicants may face several challenges with the approval of their applications for personal loans with a low credit score of 640. Financial institutions often charge a higher rate of interest if your loan is accepted, which could be highly challenging given the already-high interest or profit rates of personal loans. 

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Homes Loans for 640 Credit Score 

With home loans or mortgage loans having the longest repayment tenures, a bank or loan provider may be more averse to the risk that comes with an applicant with a 640 credit score. Nevertheless, even if your application is approved, you may find yourself being charged with higher interest rates along with specific collateral.

Auto Loans for 640 Credit Score

Banks may approve your loan applications even if you have a low credit score of 640. However, as with the other loan plans mentioned here, the applicable interest rates may be high. 

Insurance Plans with 640 Credit Score

Compared to loan providers, insurance firms don’t emphasise the role of credit scores in assessing the premiums for your insurance plan. However, the score still has a role to play here. So if you have a low credit score of 640, you may expect slightly higher premiums for your plan. 

Tips to Improve Your 640 Credit Score 

Individuals with low credit scores can improve their credit scores to enjoy the benefits of high credit scores like lower interest rates, higher sanctioned amounts/limits, and more. Given below are some tips that can help one improve a low credit score - 

Timely Payments:

It is necessary to complete your bill payments promptly if you wish to maintain or improve your credit score. Whether it is a utility bill or a credit card bill, make sure to pay it off before the due date - the AECB evaluates all your bill payments from the past 5 years. 

Minimal Credit Score Checking:

Individuals must avoid checking their credit score frequently, as doing so at an unusually high frequency can quickly lead to a drop in the score.  

Restricting Loan and Credit Card Applications:

The more you send applications for credit cards and loans to various financial institutions at a time, the more (negative) impact you can expect on your credit score. Thus, it is recommended to apply only for a few credit card or loan products at a time and apply only for the ones for which you are eligible.  

Loan Repayment on Time:

Besides credit and utility bills, one must also be punctual with the monthly instalments of their loans on time to improve their score over time. As an added benefit, having a proper loan repayment history also has a positive impact on lenders, with timely payments displaying you as a responsible borrower.

How to Check Your Credit Score for Free?

As discussed above, the Al Etihad Credit Bureau (AECB) generates credit scores for UAE residents. However, every time an individual sends a request to produce a credit score, they have to pay a specific amount - the same applies to companies as well. 

To check your credit score for free, however, you can simply continue on policybazaar.ae. You can continue on our website, go to the ‘Credit Card’ section, and click on the ‘Credit Score’ option. From here on, simply provide the required details and follow the mentioned instructions to access your credit score for free in the UAE.

Key Takeaways 

Compared to 640 credit score car loans, 640 credit score credit cards, and 640 credit score personal loans, getting a mortgage loan with the same credit score may be difficult. Moreover, even if any of these are approved, the applicable interest rates would be high.

To avoid such difficulties and enjoy benefits like low interest rates, it is essential to maintain a good credit score. Accomplishing the same is fairly straightforward, as you can be punctual with your bills and debts and limit the number of applications for a loan or a credit card at a time. 

You can also access your credit report along with the credit score to understand the causes of the 640 credit score. However, one should remember not to verify their credit score repeatedly as this itself can lead to a reduction in the score. 

To check your credit score for free, you can reach out to our website - policybazaar.ae. If you have any queries regarding your credit score, you can also connect with us and have finance experts discuss the best possible solutions easily! 

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