How to Improve Your Bad Credit Score

How to Improve Your Bad Credit Score

What is Considered as a Bad Credit Score 

A credit score plays an important role in the financial aspects of your day today life. Good or Bad credit score might be a deciding factor when there is a financial necessity. A person’s credit score determines whether to apply for a loan or a credit card. Banks and financial institutions need a strong credit report and credit score. Based on Your credit score lenders determine whether you are approved for a loan or a credit card application. Your credit score helps the lender estimate your ability and capacity to repay the loan. 

What is a Bad Credit score? 

A credit score is a digit numeric expression that represents a person’s creditworthiness. It ranges from 300-900, where 300 is the lowest and 900 is the highest. It is advised to maintain your credit score closer to 900. Most Banks and Financial institutions consider credit scores of 750 and above as their ideal. A bad Credit score indicates a higher risk of defaulting on credit obligations like loans or credit card payments. 

 Let’s look at different credit score ranges: 

Credit Score Range Rating Interpretation 
800 – 850 Excellent Lowest risk of defaulting on credit obligations 
740 – 799 Very Good Low risk of default 
670 – 739 Good Generally considered a safe borrower 
580 – 669 Fair Some lenders may approve with less favorable terms 
500 – 579 Poor Subprime borrowers may have difficulty getting approved 
300 – 499 Bad Highest risk of default, very difficult to get approved 

Here are some key points about bad credit scores: 

  • A score below 700 is often considered a poor or bad credit score by many lenders. 
  • Bad scores can result from late payments, high credit card balances, collections accounts and foreclosures on your credit report. 
  • Having a bad credit score can make it difficult to get approved for loans, credit cards, mortgages, and even some jobs. If approved, you’ll likely pay higher interest rates. 
  • Building your score back up takes time and discipline by paying bills on time, keeping credit card balances low, and not applying for too much new credit at once. 
  • A bad score doesn’t have to be permanent – scores can improve by adopting good credit habits over 12-24 months (about 2 years). 

What are the factors that lead to bad credit scores? 

There are certain factors that affect your credit score. Let’s look at some of the main factors that can bring your credit score down: 

Not checking your credit score:

Checking your credit score regularly can help you avoid a significant drop due to errors. 

Delaying payment of bills

Bad credit can happen when you don’t pay bills or EMIs on time. It is one of the main factors that bring a negative effect on your credit score. You should pay your EMIs and credit card responsibilities on time each month. You should maintain discipline and pay all payments on time, as this will have a significant impact on your credit score. At the same time, try to pay all your bills in full and avoid paying the minimal balance due. If you do not pay your invoices in full, you will incur significant interest charges. 

Maintaining a high credit utilization ratio 

Try to use your credit card limit up to 15-30%. Using your credit card to the maximum limit can make it tough to manage your money. Exceeding your credit card limit and having a high credit use ratio can harm your credit score. 

Closing old credit cards 

It is important to know about credit history for your credit score. Having a long credit history improves your credit score. If you close your old credit cards, you will lose years of strong credit history and payment habits. As a result, it is best to keep your credit cards active for as long as possible, provided you are not losing money by paying the annual fee. 

Opting for settlement rather than closure 

Lenders who write off debts quickly notify the appropriate credit bureaus. Loan settlement is considered bad credit behavior, thus the entry remains in the borrower’s credit history for a time, lowering their credit score by 75 to 100 points, depending on the credit bureau. Additionally, it makes it difficult for the individual to apply for fresh credit. The lender will be cautious and may even refuse to offer the loan if the borrower’s credit report shows any ‘loan settlement.’ As a result, experts recommend closing the account rather than settling. 

How to improve your Bad credit score? 

Credit scores do not remain stable; they change when the information in your credit report changes. That means you can take control of your finances right now and make changes that will improve your credit scores. Here is how. 

Pay Your Bills on Time 

One of the most effective strategies to avoid late payments is to set up autopay for recurring expenses like student loans and automobile payments. Your bill will be deducted straight from your bank account on the due date, so you will not have to remember to log in to a payment system or submit a check. However, be sure you have enough money in your checking account to support your payments; otherwise, you may be charged fees. 

Pay Down Debt 

If you’re focused on increasing your score, you may want to delay applying for new credit in the meantime. A hard inquiry occurs when a lender investigates your credit to determine your eligibility for a financial product. It will appear on your credit record and may impact your credit score. This is because lenders may consider you a higher credit risk if you try to borrow money from multiple sources. 

Avoid New Hard Inquiries 

If you’re looking to improve your credit score, you might want to put off applying for new credit for a while. A hard inquiry occurs when a lender investigates your credit to determine whether you qualify for a financial product. It will appear on your credit record and could have an impact on your credit score. This is because lenders may view you as a higher credit risk if you apply for loans from multiple sources.  


A credit score is a key factor in financial support; paying all your bills on time can help you create a great credit history over time. Having a good credit score can help you receive an instant loan; online loan apps such as Zap Money provide instant personal loans to persons with good credit scores. 


Can I still get a loan with a bad credit score? 

Yes, there are lenders who specialize in offering bad credit score loan apps to individuals with low credit scores. However, these apps typically feature higher interest rates and shorter repayment terms. 

How can I improve my credit score quickly?

  • Pay your bills on time, every time. 
  • Reduce your credit card balances. 
  • Avoid taking on new debt. 
  • Monitor your credit reports regularly for errors. 

What is a secured credit card?

A secured credit card requires a cash deposit as collateral. Using the card responsibly can help you establish a positive payment history and improve your credit score. 

What are the qualifications for a loan app for a bad credit score?

 Qualifications for loan apps for bad credit score may vary depending on the specific lender but often include: 

  • Minimum income requirements 
  • Stable employment history 
  • A valid bank account 
  • Proof of identity 

Hariharan Ravichandran

Understanding the ever-changing environment of money may be a difficult experience.I'm Hariharan, a seasoned finance explorer and blogger. I am right there with you, beginning on this journey of financial enlightenment as a fellow traveler.


The ZapMoney app makes personal finance easy, accessible, and affordable. The App is available on Google Play Store and App Store for download, allowing you to sign up and access easy personal loans. ZapMoney is powered by Monexo Fintech Private Limited which is a registered NBFC-P2P.
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