Late Loan EMI Payments Impact Your Credit Rating, Quantifying the Specific Degree: A Comprehensive Explanation of the Calculation Process
Missing an EMI payment can have a significant impact on your credit score, making it more challenging to secure loans in the future. Here's a breakdown of how the duration of the delay affects your credit score.
A one-month delay in EMI payment can cause a slight drop in your CIBIL credit score and may be reported as a late payment, affecting your creditworthiness. Delays beyond 7 days start to affect the credit score negatively.
If you miss an EMI for up to 30 days, it can cause a drop of 50 to 100 points in the credit score. Missing multiple EMIs can lead to a significant fall in the credit score, potentially exceeding 150 to 200 points.
In cases of a delay of over 90 days, the credit score can plunge drastically, almost wiping out the borrower's credibility. This severe delay can make it difficult to secure loans due to the default classification. A delay of two to three months can cause a fall of nearly 150 to 200 points in the credit score.
Not paying the credit card bill on time is another reason for a low credit score. Misusing a credit card, such as exceeding the credit limit, can also negatively impact your credit score.
It's essential to remember that these practices damage a credit score and reduce the borrower's credibility in the eyes of banks. A strong credit score, on the other hand, makes it easier to secure a loan or credit card from banks.
A credit score reflects a person's financial history. If the delay extends to 60 to 90 days, the record may be classified as default, making it much harder to secure loans in the future. In such cases, the damage to the credit score is far more serious.
In conclusion, prompt EMI payments are crucial for maintaining a good credit score. Missing an EMI or delaying payments can have a lasting impact on your creditworthiness and borrowing capabilities.
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