640 CIBIL Score - Is it good or bad?
A 640 CIBIL Score is considered fair, falling short of the ideal range for good creditworthiness. While it is an improvement over poor scores, it still reflects moderate financial risk. Borrowers with a 640 score may qualify for loans or credit cards, but lenders may impose higher interest rates and stricter conditions. This score indicates potential financial issues, such as delayed payments or overutilisation of credit. Strengthening your repayment discipline, reducing credit utilisation, and avoiding multiple loan applications can help improve your score. A higher score will provide better access to financial products with competitive terms.
How to improve your 640 CIBIL Score?
Improving a 640 CIBIL Score requires consistent financial discipline. Start by paying all EMIs and credit card bills on time, as punctual repayments significantly boost your score. Limit your credit utilisation ratio to below 30% of the available credit. Avoid applying for multiple credit products simultaneously, as this increases credit inquiries, potentially lowering your score. Monitor your CIBIL report regularly for errors and get them corrected promptly. Maintaining a healthy balance between secured and unsecured loans also strengthens your creditworthiness. Patience and responsible financial behaviour will gradually improve your score and open up better financial opportunities.
How does a 640 CIBIL Score impact interest rates?
A 640 CIBIL Score impacts interest rates negatively. While borrowers with this score may qualify for loans, they often face higher interest rates due to perceived moderate credit risk. For instance, individuals with excellent scores might secure loans at 10% interest, whereas borrowers with a 640 score may face rates exceeding 14%. These higher rates increase repayment costs. Improving your credit score through disciplined financial practices can help you secure loans with better terms and lower interest rates, leading to significant long-term savings.
