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My Credit Score is 650. How Much Loan Can I Take if I Want to Buy a Car?

02-Feb-2018 written by : FSI-Team

My Credit Score is 650.

There are numerous advantages of having your own personal vehicle. However, most of the decent cars are quite expensive and it's usually not a good idea to get a used one due to the high maintenance costs and the depreciation factor. So, what can you do if you don't have enough money to pay the full price of the car you want? Well, a loan is always a good option.

When it comes to getting a car loan, then your CIBIL score plays a big role in a variety of factors including the car loan interest rate, approval time, etc. In fact, if you have a poor score, then you may not even qualify for a loan at all.

What does a CIBIL score of 650 means for your car loan?

The first thing to understand here is that there are different credit rating agencies in India, and the 650 score has a different meaning for them all. Talking about CIBIL score calculation, the agency scores the credit profiles on the range of 300 to 900. This means that the lowest CIBIL score you can have is 300, and the highest 900.

If your score is 650 then you would be disappointed to know that it's not good enough. This is because, for most banks and NBFCs, a good CIBIL score starts from 750. So, unless you have a score of 750 or more, you won't be believed to have a high creditworthiness.

How does it affect a car loan application?

Although a score around 650 is considered "not good", it isn't too bad either. So, you may not get the exact amount you want, and you may not get an attractive car loan interest rate either. However, you can certainly get an approval with this score still. Had your score been below 550, then it would be a problem. However, 650 is still alright.

What to do when you can't get the full car loan amount?

As mentioned earlier, it's possible that you don’t get the full loan amount that you are interested in because of a low CIBIL score. But that doesn't mean that there is no solution.

If you want to enjoy a low car loan interest rate and get the full loan amount approved, then you must increase your CIBIL score up to 750 or more. Besides, accomplishing this feat isn't that hard.

The following are some of the best things that you can do to improve your score quickly:

1. Say "No" to Late Payments

Are you often late with your credit card bill payments? If your answer is "yes", then you also have the answer to why your score is low in the first place.

Your repayment history plays the biggest role in your CIBIL score calculation. So, if you are late with your credit card payments and/or loan EMIs, etc. then it can have an adverse effect on your score. So, if you make it a point to pay every bill and EMI on time then you can also increase your score from current 650 to a minimum of 750 within few months!

2. Credit Diversity

Another method of quick credit score improvement is to diversify your credit portfolio. In other words, by getting experience with different types of credit- credit cards, small personal loans, secured loans, etc. you can improve your score quickly and easily.

3. Controlled Credit Utilization

Credit cards have their advantages, but if use them excessively, then it can harm your credit score.

Ideally, you should not spend more than 30-35% of the limit provided to you on your credit card. So, if your credit card limit is Rs. 1 lakh, then you should not spend more than Rs. 30,000 or Rs. 35,000 a month.

4. Report Check

A lot of times people get a low CIBIL score simply because of an error in their credit report. It could be in the personal details, payment history, account details, etc. However, by identifying any such error and getting it corrected can definitely improve your credit score.

You can also easily apply for your free credit report by creating an account on CIBIL and completing a small process.

You should not be deterred if you are facing problems due to a credit CIBIL score. By becoming credit responsible you can easily qualify for a car loan, and get it approved at terms you are comfortable with!


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