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Does Missing a Payment Affect CIBIL Score?

Does Missing a Payment Affect CIBIL Score?

finance
July 9, 2022
5 min read
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Does Missing a Payment Affect CIBIL Score?
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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. 

  • Late payments get reflected in your credit report, which in turn can reduce your chances of securing a loan or a credit card in the future. 
  • Another major impact caused due to missing to pay your outstanding credit card bills payments or loan installments is to your loan application. It minimizes your chances of getting approved for a loan. 

How to improve your CIBIL score?

In order to improve your CIBIL score you must follow these steps.

  • Make timely payments every month
  • Aim at keeping your  credit utilization ratio below 40%
  • Avoid closing your older or unused credit card accounts
  • Check your credit report regularly
  • Do not apply for multiple credit cards
  • Avoid applying for multiple loans within a short span of time
  • Pay your loan installments on time and in full
  • Try to build a strong credit age
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Frequently Asked Questions

Can a single late payment hurt my credit score?

Yes, it can. Even a single delayed or missed payment can leave a negative impact on your CIBIL score.

How can I get a late payment removed from my credit report?

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. 

If I miss out on paying my credit bill, will that impact my credit score?

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.