If you are smart with your personal finance, then you must already know the significance of your credit score. It affects the interest rates, credit card limits, insurance premiums, and more.
One of the biggest factors that play a role in your CIBIL score calculation is your repayment history. In other words, how punctual you are with your EMI payments, credit card payments, etc. affect how low or high your score is.
Timely payments boost your score, but late payments can cause damage too. That said, if you have missed a single payment, then how big of damage can it actually cause? Let's find out.
It's no secret that late payments can lead to a low CIBIL score. However, the actual damage varies from one person to another. Plus, a lot of times the lenders don’t report a single late payment to the credit rating agencies.
There are many banks and other financial institutions that give their borrowers a grace period of 30 days. So, even if you are late with a particular EMI or credit card bill but clear it within a month past the deadline, your score may not get hurt. In addition to that, if you are lucky, then your bank could be using an advanced analytics system that takes into account your past repayment records. So, if you have been consistent with your payments in the past, then the bank may overlook a single late payment.
There are some banks that take late payments very seriously. So, it's possible that even a single late payment of yours get reported, which may lead to a low CIBIL score. That said, the actual damage depends on the following factors:
If you were late with a particular payment recently, then you can't change what's happened. You can only hope that it won't affect your credit profile. However, it should also serve as an eye-opener and force you to be better prepared for the future.
To ensure that you are never late with an EMI payment ever again, the following tips can help:
Your repayment history plays the biggest role in CIBIL score calculation. Thus, you must take it seriously and try to be punctual with every single payment.