Missed EMIs or Credit Card Bills? Know the Effect on Your CIBIL Score

Your CIBIL score —a three-digit number ranging between 300 and 900—reflects your creditworthiness and plays a crucial role in determining your eligibility for loans and credit cards. This score is maintained by the Credit Information Bureau (India) Limited (CIBIL), one of India’s leading credit bureaus. Among various factors affecting your CIBIL score, timely payment of EMIs and credit card bills holds the highest importance. Even a small delay can have a significant impact, reducing your score and damaging your credit profile. Understanding how delayed payments affect your CIBIL score can help you maintain a strong financial standing.

What Is a CIBIL Score?

A CIBIL score is a numerical representation of your credit behaviour based on your repayment history, outstanding debt, credit mix, and new credit inquiries. Lenders use it to assess the risk associated with lending to you. Typically, a score above 750 is considered good and increases the chances of loan approval at favourable interest rates.

CIBIL collects information from banks and financial institutions about your loans, credit card usage, and payment history. Any delay or default in repayment is reflected in your report and can affect your score for months or even years.

How Payment Delays Affect Your CIBIL Score

Even a single delayed payment can lower your CIBIL score, depending on the severity and frequency of delays. Here’s how it impacts your credit standing:

1. Drop in Credit Score

A delay of 30 days or more in EMI or credit card payment can reduce your score by 50 to 100 points, depending on your overall credit history. Multiple delays can have a compounding effect, making it harder to rebuild your score later.

2. Negative Remarks in Credit Report

Every delay is reported to CIBIL by your lender and appears as “Days Past Due (DPD)” in your report. For example, DPD 30, 60, or 90 indicates how many days your payment was overdue. These remarks serve as red flags for future lenders.

3. Reduced Creditworthiness

A low credit score indicates higher lending risk, which may lead to loan rejections or higher interest rates. Even if approved, your credit limit or loan amount may be lower than expected.

4. Long-Term Impact

Payment delays stay on your credit report for up to 36 months, affecting your ability to secure future loans, credit cards, or even rental agreements in some cases.

Factors That Worsen the Impact of Late Payments

1. Frequency of Delays

Occasional delays may have a minor impact if your overall record is good. However, repeated late payments suggest poor financial discipline, leading to a steeper score decline.

2. Severity of Default

A delay of less than 30 days may cause a small dip, but once the overdue period crosses 90 days, the account may be classified as a Non-Performing Asset (NPA), severely damaging your score.

3. Type of Credit

Defaults on secured loans (like home or car loans) affect your score less than defaults on unsecured loans (like personal loans or credit cards) because the latter indicates higher risk for lenders.

4. Credit Utilisation Ratio

If you regularly spend more than 30%–40% of your available credit limit and also delay payments, your score can drop sharply due to the double impact of overutilisation and late repayment.

Indirect Consequences of Delayed Payments

1. Higher Interest Rates

Borrowers with poor credit scores are charged higher interest rates, increasing the overall cost of borrowing.

2. Difficulty Getting New Credit

Lenders are reluctant to approve loans or credit cards for individuals with a history of missed payments . Even if approved, limits are lower and conditions stricter.

3. Guarantor and Co-Applicant Impact

If you are a guarantor or co-applicant for a loan, your CIBIL score can also be affected if the primary borrower defaults or delays repayment.

4. Psychological Stress and Financial Pressure

Delayed payments not only affect your credit score but also create mental stress due to increasing debt and penalty charges.

How to Recover from a Low CIBIL Score Due to Late Payments

1. Clear Outstanding Dues

Pay all overdue EMIs, credit card bills, and penalties immediately. Once the dues are cleared, your score will start improving within a few months.

2. Avoid Further Delays

Set reminders or enable auto-debit facilities to ensure timely repayments. Consistency is key to rebuilding a positive repayment history.

3. Maintain Low Credit Utilisation

Use only 30%–40% of your credit card limit to maintain a healthy credit utilisation ratio.

4. Monitor Your Credit Report

Check your CIBIL report regularly to identify any inaccuracies. You can download one free report per year from the CIBIL website (www.cibil.com).

5. Diversify Credit Responsibly

Having a mix of secured and unsecured loans improves your credit profile, but only if managed responsibly.

Preventive Measures for Timely Payments

• Set up automatic payments for recurring EMIs and credit cards.
  
  
• Create a monthly budget to manage your cash flow efficiently.
  
  
• Keep track of due dates using financial apps or calendar reminders.

Avoid taking multiple loans simultaneously.

Conclusion

Timely payments are the backbone of a healthy credit profile. Even a single missed or delayed payment can damage your CIBIL score and affect your financial credibility. The good news is that consistent repayment behaviour can gradually restore your score. By being disciplined, tracking expenses, and using credit wisely, you can maintain an excellent credit standing and enjoy smoother access to financial opportunities.