A credit score in the range of 300 to 550 is considered bad. If your credit score is in this range, you have to take serious action to improve it. You will have difficulties in getting your loan or credit card application approved if your credit score is bad. Let us now look at the different ranges of credit scores and the rating that is given for each range. Let us also learn more about the reasons for a bad credit score

Different Ranges of Credit Scores and Their Interpretation 




300 to 500


  • Have to work on improving the credit score 
  • Low creditworthiness 
  • Higher interest rates
  • No lenders 

550 to 650


  • Need to work on improving the score
  • Few lenders
  • low credit worthiness 
  • Higher interest rates

650 to 750


  • Better interest rates
  • Most lenders available
  • Fair creditworthiness
  • Can still work to improve 

750 to 900


  • Highly creditworthy
  • Low interest rates
  • All lenders available
  • Faster loan approval

What Are The Reasons For A Low Credit Score? 

  •  Not Paying Your Bills on Time: If you don’t pay your EMIs or credit card bills on time, it can have a big negative effect on your credit score. So, ensure timely bill payments to maintain a good credit score
  • High Credit Utilization Ratio: The CUR is one of the most important factors that impact your credit score. It constitutes about 30% of your credit score. If the CUR is low, then the credit score will be good. If your CUR is high, lenders will perceive you as credit hungry and your credit score will be bad.
  • Closing Old Credit Cards: When you close your old credit cards, you are removing a good credit history of a long duration from your credit report. So, keep your credit cards active as long as possible unless you have to pay annual fees for them. 
  • Applying For Multiple Credit Cards: When you apply for multiple credit cards, you  will be seen as credit hungry. Each time you apply for a credit card, a hard inquiry will be triggered, and it will cause a dip in your credit score by a few points. Thus, it will end up resulting in a bad credit score. 
  • Not Checking Your Credit Report Regularly: Your credit report is a summary of your repayment history, credit transactions, personal information, and existing as well as past credit accounts. The reason for your bad credit score may be some discrepancies in the credit report. By checking your credit report regularly, you will be able to identify the areas where there are mistakes and rectify them by following up with the credit bureau
  • Not having a good credit mix: It is important to maintain a good mix between secured and unsecured loans. Having multiple secured loans and no unsecured loans will not improve your credit score. Therefore, create a balance between secured and unsecured loans. 
  • Having too many hard inquiries: Having too many inquiries shows credit-hungry behavior and each enquiry goes down in your credit report.  There must be enough gap between various inquiries. According to experts, the best way to improve credit scores is to keep the number of enquiries as low as possible. A gap of a few months between two loan applications will ensure that your credit score does not dip. 
  • Choosing Closure instead of Settlement: When there are payment issues, many individuals opt for settlement. As a result, banks label such cases as ‘settled’ in the report. Opting for settlement is not recommended and instead one should choose closure. Opting for settlement will cause more harm than good in the long run. 

What Are The Cons of Having A Bad Credit Score? 

A credit score is an important factor that lenders consider while approving loan and credit card applications. 

Let us see the cons of having a bad credit score: 

  • Limited card choices: The card choices are very limited. A person with a bad credit score will get access only to secured credit cards. They may not even be considered for other credit cards. Individuals with a bad credit score are likely to miss out on a lot of introductory offers like cashback and other incentives.
  • Higher rate of interest: A bad credit score reduces your chances of getting approval for a loan. Even if you get a loan, you will get it at a higher rate of interest only and you will not get the desired loan amount. When you have a bad credit score, you will be a risky customer for the lender. 
  • Fewer credit rewards: A lot of welcome offers, cashbacks, and rewards are not available to people with a bad credit score. 

Steps To Improve Your Credit Score

  • Review and analyze your credit report regularly
  • Make the necessary changes and improvements
  • Pay your dues and fix your late payments 
  • Pay off your debts instead of transferring it to other accounts 
  • Raise the credit limit on your existing credit card. 
  • Get a secured credit card as it is a good way to build your credit score. 
  • Have a good credit mix of secured and unsecured loans 
  • Maintain a good credit utilization ratio. 

FAQS of What Is A Bad Credit Score

1:How long does it take to rebuild your credit from bad to good?

It depends on the payment history of the person. If a person has many missed payments for the past 3 years, it will take a while for him to boost his credit score. On the other hand, if the person has multiple missed payments for the 6 years, then his credit score will increase faster provided his repayment history has been very good since then. 

2:How easy is it to recover from bad credit?

It could take a while to recover from bad credit. You have to rebuild your payment history, pay existing debts and remove negative entries from your credit report. It helps to know how long negative entries will stay on your credit report.