Established back in the year, TransUnion CIBIL is the abbreviation for Credit Information Bureau of India Limited. It plays an important role when it comes to applying for a loan or a credit card. The better the CIBIL score, the higher the chances of securing a loan or credit card. A low CIBIL score makes it difficult for a borrower to get his/her credit applications approved.
Now, CIBIL or rather credit is dependent on a number of factors such as missed payments, outstanding debt, credit utilization ratio, etc. Here, in this article, we’ll take a look at how missed payments can impact your credit score.
What is a late payment?
Generally, lenders issue a due date by which customers have to repay the money borrowed. Missed or delayed payment of credit card bills or loans as per the due date are recorded in the CIBIL and termed as late payments. So, whenever you miss a payment, the credit score falls right away, and it may take quite some time to rebuild the same even after maintaining good credit habits.
Late or missed payments are considered to be a major red flag by lenders when it comes to determining a borrower’s eligibility for loans or credit cards. As already mentioned, borrowers with a poor CIBIL score can find it difficult to secure a loan or credit card as lenders consider such applicants to be highly risky. However, timely repayments act as an assurance for the lenders that the former can pay back the money borrowed on time.
How delayed payments can impact your CIBIL or credit score?
There are a several factors that can potentially impact one’s CIBIL score and one such factor is missed payment of a credit card bill on loan. So, what happens when you miss a payment? When you default on a credit card bill or loan, you are likely to witness a dip in your credit or CIBIL score. Your CIBIL score gets deteriorated if you have missed even a single payment for any loan or purchases made using a credit card.
Below are a few other consequences of late payments.
How to improve your CIBIL score?
In order to improve your CIBIL score you must follow these steps.
Frequently Asked Questions
Yes, it can. Even a single delayed or missed payment can leave a negative impact on your CIBIL score.
To get there, you need to make a couple of timely repayments in case you have defaulted on a payment. These repayments are taken into consideration by lenders and once credit agencies are made aware of your positive payment history they may get the late remark removed from your credit report.
Yes, obviously. If you miss out on paying your credit card bills on time, it may bring down your credit score by quite a few points.