350 Credit Score

A credit score of 350 is one of the lowest credit scores considered in the ‘Poor’ credit score range. While it alarms the necessity for improvement, it also provides an opportunity to rebuild and enhance your financial health. People in this credit range are considered risky borrowers, making it difficult to get collateral-free loans. However, with the right steps, they can work towards a stronger credit profile.

Improving your score opens doors to better financial options and reduces costs associated with higher loan interest rates & charges, making future credit access more affordable and manageable.

This page will help you understand your present credit score, and provide you with tips to increase your credit score from 350 to 750.

Table of Contents:

• ⇾ 350 Credit Score—Good or Bad?
• ⇾ Understanding Credit Score & CIBIL Score
• ⇾ Importance of a Higher CIBIL Score
• ⇾ Increase CIBIL Score From 350 to 750
• ⇾ Tips to Leverage CIBIL Score of 750
• ⇾ Frequently Asked Questions

350 Credit Score: Good or Bad

The credit score can be broadly categorised into several ranges on a scale of 300 to 900, within which the user falls, depending on their score.

Ranges below 550 are generally considered ‘Very Poor’. Thus, a 350 credit score is considered a bad credit score.

Below 300 is a general range where people with no credit history fall. However, extremely poor credit habits can also cause it to happen, though it is very rare.

It is almost impossible for beginners to fall into the ‘Very Poor’ category, and only people with a prior credit history can fall to a credit score of 350 due to a variety of reasons, such as missed payments, defaulting bankruptcy, or high credit utilization.

Impact of a 350 Credit Score

As it is not a good range of scores to have, borrowers often face difficulties rather than benefits, such as:

1. Poor credit rating: Having a low credit score makes obtaining new loans and credits difficult, and the available ones have unfavourable loan terms.
2. Higher interest rates: Lenders view people within this range as high-risk borrowers; hence, credits will often come at a higher interest than normal.
3. Risk of being marked as delinquent: The score itself is due to missed payments and other negative remarks, which, if left unattended for long enough, will mark one as unreliable.
4. Limited credit options: It is almost impossible to get approved for a loan as lenders have nothing to find you as trustworthy.
5. Additional Fees: Lenders who approve loans might charge additional fees as compensation for the risk they are taking.
6. Long-term impacts: A poor credit score can persist for years if not attended to with extreme care. These can include tedious delays in loan availability, renting challenges, and high financial stress.

For this reason, a credit score of 350 is certainly a bad range to be in, and one must avoid falling into this range as it adversely affects their financial health.

Credit Score vs. CIBIL Score

While credit scores and reports might sound similar to most, they are not essentially the same.

A credit score is a score/rating given to each individual for their credit usage. The more responsible they are with the credits, the more scores they have. A higher score indicates good financial health and brings ample benefits, while a lower credit score makes it more difficult to achieve financial independence.

CIBIL score, on the other hand, is a representation of credit score by TransUnion CIBIL, one of the four major credit bureaus in India. It uses a range of 300 to 900.

Benefits of a Higher CIBIL Score

A higher CIBIL score indicates higher financial stability. It can have several positive impacts on your financial health, including:

• Faster Loan Approval
• Lower Loan Interest Rates
• Flexible EMI & repayment terms
• Higher Credit Limits
• Negotiating power with lenders
• Better Insurance Premiums
• Better Credit Card & Other Loan Offers

Tips to Increase CIBIL Score from 350 to 750

While a score of 350 can make it hard for the borrower to build better credit, it is not impossible. There are several options one can adopt to build a better credit score:

1. Use a secured credit card.
   This is one of the most secure and best ways for a person with a low score. The person makes a deposit, which serves as their credit limit, making this amount a safety net in case they miss out on payments. However, it is best not to miss out anymore.
   Many institutions like HDFC, ICICI, and Axis Bank offer secured credit cards against fixed deposits.
2. Get a co-signer.
   Someone you know with a better score can add you as their authorised user, after which you can use their credit card. It will help in building a better credit history, as their positive credit history will be reflected on your report.
3. Credit builder programs.
   While India doesn’t have direct credit builder programs like some other countries, there are some indirect methods. These may include small cash personal loans, secured loans (loans against collateral), microfinance, etc.
   
4. Personal loans from private financial institutions
   Various private financial institutions, like Muthoot Finance and Bajaj Finserv, provide numerous loans, some focused on people with lower credit scores. However, they are usually at higher rates, so carefully read the terms and conditions to ensure you use the one that best suits you.
5. Consistent Repayment
   Paying back on time and in full is one of the best ways to improve your CIBIL score. Most repayment plans are monthly, so make sure you pay before the deadline.
6. Decrease credit utilisation ratio
   It is the amount of credit you used to the total credit you have. Keep it under 30% to have the best improvement rate in credit score.
7. Clear outstanding bills
   Clearing outstanding bills is the first step in improving your CIBIL score if you are an individual with a low CIBIL score. This will clear out most of the negative remarks on the credit report.
8. Avoid frequent hard enquiries.
   Applying for frequent loans in a short amount of time can raise a lot of hard enquiries, which can decrease your CIBIL score.
9. Diversifying your credit bucket
   Taking on different types of credit, such as personal loans or credit cards, can reflect positively on your profile, as it proves you are someone who can manage different credits. Just be careful enough not to apply for multiple credits in a short period.
10. Maintain a long credit history.
    Keeping old accounts open will help build a higher CIBIL score, as a longer credit history can have a positive impact on your credit report. This portrays that the person has significant experience with managing credits.
11. Try for a higher credit limit.
    A higher credit limit has two benefits: you can have a better-relaxed expense and a lower credit utilisation ratio.
    These are some basic things to consider to get a better CIBIL score. Along with these recommendations, also remember to check your credit score regularly to track your progress.

350 Credit Score Loan

With a credit score of 350, typically only secured loans or loans with security such as home loan, car loans, gold loans, loans against property, loan against FD, loan against mutual funds, etc. As 350 is a bad credit score, only limited loans will be available at relatively higher interest rates. The loan options for a 350 credit score are as follows:

• Secured Loans: Approval is easier as collateral reduces the lender's risk.
• Peer-to-Peer Lending (P2P): The P2P lending platforms offer small loans even with a low credit score.
• Government-supported loans, such as Mudra loans, PM Awas Yojana, etc., can be an option.