An overview of 650 credit score and what it means

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The credit score is a term that almost everyone has come across once in their life. This 3-digit score, assigned by AECB (Al Etihad Credit Bureau), signifies an individual's credit worthiness. Ranging from 300 to 900, this score aids financial institutions in gauging whether a borrower is capable of repaying the debt or not.
To put it simply, this number can decide your fate as a borrower. Thus, it is vital to be aware of it if you are planning to take credit.

What Does a 650 Credit Score Mean?

Now, if you are wondering, is 650 a bad credit Score? Well, the answer is not a definite yes, it is surely a low one.

With reference to the aforementioned table, a 650 credit score comes under the category of low and with 2 stars. Therefore, you need to take care of it and put in place proper financial planning to improve it.

Nonetheless, the current scenario can be tricky for you as a prospective borrower. With a credit score as low as 650, it will be challenging to avail of a loan. Moreover, you may have to get the needed loan amount. This includes a high-interest rate, higher down payment (if required), strict repayment plan, etc.

So, the question is, what put you in this position in the first place?

Let’s Take a Look at Factors That Affect Your Credit Score Negatively

Following are some of the factors that can lower your credit score –

Not Paying Dues on Time

Not paying your dues can negatively affect your credit score. This comprises credit card bills, current EMIs and other financial obligations.

Not Maintaining the Credit Utilisation Ratio Wisely

The credit utilisation ratio signifies your behaviour as a borrower. So, if you push the credit limit in terms of maximising your credit card, or overdraft account, it will have an adverse effect on your credit score. The reason is that you will be perceived as an irresponsible borrower.

Applying for Multiple Credits at One Go

Applying for more than one loan at a time can also lower your credit score. The logic behind this is that once you apply for credit, the lender places a verification request with the respective credit bureaus, known as hard queries. Now, each hard query reduces the credit score by a small margin, and multiple ones can lower it drastically.

Not Maintaining a Mix of Credit

If your credit portfolio only includes secured loans or unsecured loans, this can be detrimental to your overall credit score. The reason being, taking up diverse credit options and closing them successfully makes the impression of an accountable borrower. Therefore, it mirrors your credit score as well.

Closing Old Credit Cards

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

How to Improve Your Credit Score?

Now, a harsh reality is that you cannot instantly increase your credit score. On the other hand, your financial requirements will not wait for that long. Now if you are thinking is 650 a good credit score, here are a few tips to make it better –

  • Repaying your dues on time
  • Applying for one loan at a time
  • Maintaining a diverse credit portfolio
  • Keeping a low credit utilisation ratio
  • Resolve any discrepancies in the credit report

What Can You Get with a 650 Credit Score?

It is essential to have an idea of the financial services you can avail of with your current credit score, i.e. 650. To help you make a decision, the following section has the answer to some common questions:

Can You Get Credit Cards with a 650 Credit Score?

Yes, there are credit cards for a 650 credit score. However, they will come with certain limitations in terms of the credit limit and associated benefits. The repayment terms will also be stringent.

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

Can You Get a Personal Loan with a 650 Credit Score?

Yes, you can get a personal loan with a credit score of 650. However, the loan amount and its terms will differ depending on the financial institution you take the credit from.

Can You Get Home Loans for a 650 Credit Score?

Yes, you can service a housing credit with a 650 credit score. But, the loan terms, like the interest rate, may be higher, may not have the repayment flexibility and other limitations. Additionally, you may not get the loan amount you need.

Can You Get an Auto Loan with a 650 Credit Score?

Yes, there are 650 credit score auto loans. But, before going ahead, do not forget to review the loan terms.

Can You Get Insurance Plans with a 650 Credit Score?

Yes, you can get any insurance policy that you desire (life, general, and health) with a credit score of 650.

A 650 credit score is not considered a decent one with respect to a loan. However, people can try and work on this score to improve it with the help of the methods mentioned above, as the banks or lending institutions will favour them more concerning the same.

Frequently Asked Questions

What can be deemed as an ideal credit score?

A credit score of more than 700 is ideal in UAE, as financial institutions will feel comfortable extending a credit against favourable terms.

Is it possible to achieve the perfect credit score of 900?

Yes, it is possible to reach a credit score of 900. But it is highly unlikely and quite difficult to do the same.

Is it possible to get a loan at a reduced interest rate with a high credit score?

Yes, if you can maintain a high credit score, i.e. above 750, you can negotiate with the lenders to secure credit against a lower interest rate.

Who is responsible for computing credit scores in the UAE?

Al Etihad Credit Bureau or AECB is responsible for calculating the credit score in UAE.

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