What Does a 630 Credit Score Mean?
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630 is considered an average or a fair credit score in the UAE. Your eligibility for financial products such as credit cards and loans, as well as the interest rate offered for them, depends on your credit score.
With a credit score of 630, you've entered the ‘fair’ category within the spectrum of credit scores. This means you can access financial services like mortgages and auto loans, albeit with slightly higher interest rates compared to individuals with stronger credit histories.
To prevent your credit score from slipping into unfavorable territory, you should consistently adopt positive credit practices to enhance your score. Here are a few rapid strategies for boosting your creditworthiness.
Types of Credit Cards Available for a 630 Credit Score
Discussed below are the types of credit cards available for a 630 credit score -
Secured Credit Cards -
They can be a wise choice when your credit history requires improvement. Opting for a secured credit card might be the optimal solution if your credit still requires some attention.
When you apply for a secured card, you'll be required to provide an upfront security deposit. Typically, this deposit determines your credit limit and offers the card issuer a safeguard in case of any failure in settling your debt.
As secured cards present lower risks to credit card issuers, they tend to be more accessible to individuals with less-than-stellar credit histories. Additionally, if the lender reports your punctual payments and other credit-related actions to al etihad credit bureau, a secured card can work in your favour as a borrower by enhancing your credit history.
Unsecured Credit Cards -
If covering a security deposit is beyond your means, there's a possibility of locating an unsecured credit card. However, this might involve accepting an annual fee, which could be considered more unfavourable than a security deposit due to its usual nonrefundable nature. Additionally, you may encounter elevated interest rates.
Store Credit Cards -
Store credit cards often offer incentives for shopping at a specific retailer. As this class of cards can either be secured or unsecured, it doesn't technically fall into a separate category.
Nevertheless, it's important to consider store credit cards as an option if you're in the process of establishing your credit history. They could present a more viable choice for individuals with poor credit, increasing their chances of approval for a store credit card.
With that said, it's essential to be aware that these cards frequently come with elevated interest rates and can typically only be used at a designated store. Conversely, these cards might provide rewards and advantages that are worthwhile if you're already a regular shopper at the particular store in question.
Personal Loan Options for a 630 Credit Score
Getting approved for a personal loan when your credit score stands at 630 could pose some challenges. With your current aecb credit scores, you might not have the flexibility to explore personal loans offering the most favourable terms such as low interest rates.
Instead, you may have to settle for a personal loan that carries a high interest rate, not to mention additional costs like an origination fee.
This situation might make the idea of taking out a personal loan seem rather unattractive, especially if your primary objective is to use the loan for consolidating high-interest credit card debt. In fact, the Annual Percentage Rate (APR) on your personal loan could end up being just as high as, if not higher than, the interest rate that you're presently paying on your credit cards.
On the other hand, if your goal behind obtaining a personal loan is to finance a significant purchase, it's worth asking yourself whether this purchase is an immediate necessity. If it's something that can wait until you've had a chance to improve your credit, you might become eligible for a personal loan with a lower APR and more favourable terms down the road.
If you find yourself in urgent need of funds and struggling to secure a personal loan that you qualify for, you might be contemplating a payday loan as an alternative. However, it's important to exercise caution with these short-term loans that often come with exorbitant fees and high interest rates. They can swiftly lead to a cycle of debt that's exceptionally challenging to escape from.
Before you proceed with a payday loan application, take a moment to explore whether there are any other viable options available to you.
Auto Loan for a 630 Credit Score
Although the impact of credit score on auto loan approvals is usually not that prominent, a 630 credit score can still affect the chances of getting an auto loan. Even if you want the best auto loan, there are chances that you might have to pay a higher rate of interest.
Some alternatives to this include -
- Consider having a co-signer who could be a trustworthy family member or friend with a good credit score and is willing to share the responsibility of the auto loan with you.
- Go for alternative lending options like seeking loans from credit unions or an online lender.
- Connect with the car dealership if they have a financing team dedicated to providing a car loan to people with a 630 credit score.
- You can also opt for the buy-here, pay-here finance method, albeit only as a last option.
Home Loan for a 630 Credit Score
The credit score required to get a home loan varies from one lender to another. Generally, it can get challenging to have your home loan application approved if your credit score still needs some work. Even if you have a fair credit score of 630, the chances of getting the home loan approved are considerably slim.
Thus, when planning to apply for a home loan, check how it might impact you in the long run and how it will impact your credit score.
How to Improve Your 630 Credit Score?
To move from the fair credit score range to that of a good one, you need to improve your financial habits. Here are some things you can look at -
- Paying Bills Punctually - One of the best ways to improve your credit score is to pay your utility and credit card bills on time. This presents you as a disciplined individual who pays their bills without a miss.
- Maintain Low Credit Utilisation Ratio - Irrespective of how many credit accounts you have, you should try to ensure that your credit utilisation ratio remains lower than 30% so that your credit score does not decline.
- Build a Debt Management Plan - Creating a debt management strategy can prove to be beneficial if you are facing trouble in repaying credit card debts. You can also connect with a credit counselling agency so that you can develop a feasible repayment strategy.
- Opt for a Credit Builder Loan - You can opt for a credit builder loan to build your credit score. Just make sure that you repay the amount on time and don’t miss out on any instalment.
- Apply for a Secured Credit Card - For secured credit cards, you'll typically need to provide a deposit that matches the full credit limit. Moreover, this type of card typically comes with a modest credit limit, often in the range of a few hundred dollars. However, as your utilisation of this card and your timely payments are reported to the credit bureau by the creditor, this can be a great option to improve your credit score.
Here are some frequently asked questions related to the 630 credit score.
| Credit Score for different types of Loan | |||
|---|---|---|---|
| Credit Score for Personal Loan | Credit Score for House Loan | Credit Score for Car Loan | Credit Score for Student Loan |
Frequently Asked Questions
Ans: To achieve a score beyond 630, it is essential to minimise the number of negative accounts, ideally aiming for one or fewer. Additionally, having a diverse credit portfolio, an established revolving account (typically a credit card with a history of at least 2 years), and maintaining a revolving balance below 30% utilisation are crucial factors with respect to this goal.
Ans: If your credit history starts with a low score due to poor credit, achieving a higher score becomes feasible once you've successfully eliminated any negative entries from your credit report. For instance, having three collection accounts can significantly reduce an 800 credit score to well below 600.
If you initially had a weak credit history, such as lacking any revolving accounts, a solitary negative mark could plummet your credit score far below the 500 range.
Ans: If your credit score stands at 630, lenders typically view you as a borrower with a higher level of risk. To secure loan approval, it's likely that you'll need to demonstrate robust qualifications in areas such as income, employment stability, and your handling of other outstanding debts.
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