A bad credit score can be a major obstacle when applying for loans, credit cards, or even renting a home. It indicates poor credit management and makes lenders hesitant to approve your applications. However, the good news is that you can fix a bad credit score with the right financial habits and strategic planning.
In this blog, we’ll explore six easy steps to repair your credit score and regain financial stability.
What is Considered a Bad Credit Score?
Credit scores in India typically range from 300 to 900, and anything below 650 is considered a bad credit score. The lower your score, the higher the risk for lenders, which results in higher interest rates and lower approval chances.
Credit Score Range Breakdown:
| Credit Score | Creditworthiness | Approval Chances |
| 750+ | Excellent | High approval chances |
| 650-749 | Good | Moderate approval chances |
| 550-649 | Poor | Difficult to get approved |
| Below 550 | Very Poor | High rejection risk |
Step 1: Check Your Credit Report for Errors
One of the first steps in fixing a bad credit score is reviewing your credit report for inaccuracies. Incorrect information such as unauthorized transactions, duplicate accounts, or outdated loan details can negatively impact your score.
How to check for errors:
- Request your free credit report from credit bureaus like CIBIL, CRIF, or platforms like RupeeQ where you can do it for free.
- Look for incorrect personal details or account discrepancies.
- Dispute any errors with the bureau to have them corrected.
RupeeQ Tip: Check your credit report for free using RupeeQ ACE and spot any discrepancies early.
Step 2: Pay Your Bills on Time
Your payment history accounts for about 35% of your credit score. Late or missed payments can severely damage your score and stay on your credit report for up to seven years.
How to ensure timely payments:
- Set up auto-debit for loan EMIs and credit card bills.
- Use payment reminders via banking apps or mobile calendars.
- Always pay at least the minimum due amount to avoid negative reporting.
Example:
Ravi missed two credit card payments, which reduced his score by 50 points. By setting up auto-pay, he ensured no further delays, helping his score gradually improve.
Step 3: Reduce Your Credit Utilization Ratio
Credit utilization ratio refers to how much of your available credit limit you are using. A high utilization rate signals credit dependency and can lower your score.
Ideal Credit Utilization:
Experts recommend keeping your credit utilization below 30% of your total limit.
How to lower utilization:
- Pay off existing credit card balances regularly.
- Increase your credit limit to reduce the ratio.
- Spread expenses across multiple credit cards instead of maxing out one.
Example:
Megha reduced her utilization from 70% to 25% by increasing her card limit, which boosted her score by 80 points.
Step 4: Avoid Multiple Loan Applications
Every time you apply for a new loan or credit card, lenders conduct a hard inquiry on your credit report. Too many inquiries within a short period can lower your credit score and indicate financial distress.
What to do instead:
- Check pre-approved offers using soft inquiries before applying.
- Space out loan applications over several months.
- Apply for credit only when necessary.
Example:
Anand applied for three credit cards within two months, leading to a 40-point drop in his credit score. By spacing out applications, he avoided further score damage.
RupeeQ Tip: Use RupeeQ to explore pre-approved offers by providing basic details without impacting your credit score.
Step 5: Pay Off Outstanding Debts
Having unpaid debts or being overdue on loans negatively affects your creditworthiness. Lenders view outstanding dues as a sign of financial instability.
Ways to clear outstanding debts:
- Prioritize high-interest debts first (credit cards, payday loans).
- Consolidate multiple debts into a single manageable EMI.
- Negotiate a settlement with lenders if you’re struggling to pay.
Example:
Shruti had an overdue personal loan of ₹50,000. By negotiating a repayment plan with the lender and clearing it in installments, her score improved significantly.
Step 6: Maintain a Healthy Credit Mix
A diverse credit profile that includes a mix of secured (home loans, auto loans) and unsecured (credit cards, personal loans) credit types can positively impact your credit score.
Why it matters:
- A healthy credit mix shows responsible borrowing behavior.
- Relying only on unsecured credit (credit cards) can signal higher risk to lenders.
Example:
Kunal had only credit cards in his report. After taking a small secured loan, his score improved due to a balanced credit mix.
RupeeQ Tip: Ensure a mix of different credit types to boost your credit profile.
How Long Does It Take to Fix a Bad Credit Score?
Improving a bad credit score takes time and consistent effort. On average, it may take:
- 3-6 months for minor improvements (such as reducing credit utilization).
- 6-12 months to recover from missed payments.
- 12+ months to fix severely damaged scores.
Conclusion on Fixing Bad Credit Score in 6 Steps
Fixing a bad credit score is possible with the right financial habits and proactive measures. By regularly checking your credit report, making timely payments, reducing utilization, and maintaining a healthy credit mix, you can gradually rebuild your creditworthiness.
Start your credit improvement journey today with RupeeQ’s free credit score check and personalized tips.
