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Yes. Any delays in your credit payments – be it a credit card bill or loan EMI – harms your CIBIL™ score and can cause it to drop. The late payments are also recorded on your credit report making it difficult for you to qualify for future loans.

A late payment does not just impact your future loan and credit cards eligibility but also makes it difficult to secure the best deals – interest rates, loan amount, high credit card limit, etc. So, you need to ensure that you avoid late payments at all costs.

On this page, we walk you through the impact of late payments on your credit/CIBIL™ score. We also breakdown the effect on your score based on the number of days you're back in your payments.

Impact of Late Payments based on the Number of Days Delayed

Less than 30 days late 

If your credit card bill or loan EMI payment is delayed by less than 30 days, it doesn't have much of an impact on your credit score. So, if you've forgotten to pay the bill, ensure that you settle it before 30 days to minimize the effect on your credit score.

However, note that, even if your bill/EMI is delayed by less than 30 days, you’ll have to deal with negative consequences like:

  • Late payment fees 
  • Higher APR on your credit cards

30-days Delay 

A 30-days delay will impact your credit score if it happens often. If it's your first time delaying a loan EMI/credit card bill, the lender may be lenient with you, especially if you have been making payments on time in the past. So, a single 30-day late payment will not impact your credit score. However, if it happens often, it can cause your credit score to drop by as much as 100 points, taking your score from excellent to good, good to fair, etc.

60-days Delay 

A 60-days delay in your credit card bill/loan EMI can cause significant damage to your credit score. It's noted in your credit report as most lenders report to credit bureaus once every 30 days.

90-days Delay 

If you have not paid an outstanding credit card bill/loan EMI for more than 90-days, it will be noted on your credit report and can get classified as an NPA (Non-Performing Asset). Note that different lenders have varying criteria for NPAs. Some classify a 90-days-late payment as an NPA, while others set the bar at 120-days-delay.

A late payment recorded on your credit report is likely to remain for seven years and impact your future loan eligibilities and interest rates.

More than 120 days Delay 

At this point, the late payment is classified as "collection" and noted in your credit report. This has a massive impact on your credit score, causing it to drop further.

Key Points to Note about Late Payments and CIBIL™ Scores

  • Timely payments account for 35% of your credit score. It’s the biggest factor influencing your credit score. So, it’s highly recommended that you pay credit card bills, loan EMIs and other bills on time to avoid damaging your credit score.
  • A recent analysis revealed that even a 30-day delay in bill payments can cause your CIBIL™ score to drop by 100 points. Further delays can cause your CIBIL™ score to drop further.
  • Note that different credit bureaus – CIBIL™, Equifax, Experian and High Mark – have varying algorithms to calculate credit scores. So, the impact of a late payment will have varying effects on each score. For example, it can cause your CIBIL™ score to drop by 100 points, where it may cause your Equifax score to drop by 80 points and so on.
  • Frequent delays have a more significant impact on your credit score and history. The delay is recorded in your report for as long as seven years.
  • Late payments not only impact your credit score but also cause you to pay extra money to the lender in the form of late penalties, higher interest rates, etc.

Smart Tips to Avoid Late Payments

Late payments are one of the biggest factors that pull down your credit score. On-time payments account for nearly 35% of your credit score weightage. Besides bringing down your credit score, a delayed credit card bill or loan EMI payment also incurs a late fee. We highly recommend that you plan your finances in such a way as to avoid late payments at all costs.

Here are some smart tips to avoid delays in loan/credit card bill payments:

Set up auto-debits for credit card bills and EMI payments 

This is the easiest way to avoid late payments. Due to a busy schedule, we forget to pay our credit card bills, loan EMIs and other utility bills on time. Auto-debit can help you avoid late payments due to forgetfulness.

When you set up an auto-debit facility on your bank account, the loan EMI or credit card bill minimum amount is automatically debited from your account on a specified date each month. This saves you from the hassle of remembering to make the payments every month.

Set up Reminders on your Phone 

If you don’t prefer auto-debit, then you can set up reminders on your phone. The reminder will alert you to make the payment before the due date. Alternatively, you can also sign-up for reminders from your lender notifying you of the upcoming due date.

Clear credit card bills weekly 

If you're finding it difficult to settle your credit card bills in full at the end of the month, you can pay them weekly. Yes, you can pay a credit card bill any number of times in a month. This way, the purchases you have made using your credit card are settled once a week, reducing your monthly burden.

This is a great way to reduce your overall credit card bill burden and better plan your monthly budget.

Frequently Asked Questions on Late Payments and Credit Scores

1. What happens to your credit if you make a late payment?

The impact of a late payment on your credit report depends on the number of days delay and the frequency of delays. If you’re frequently delaying EMIs and credit card bills, then your credit score and history will take a hit. The late payment is recorded on your credit report and can stay up to seven years. However, the silver lining here is that the impact of a delayed payment decreases with time, especially if you have been making timely payments after the initial delay.

2. Can I get late payments removed from my credit report?

Removing an actual late payment from your credit report is not possible. However, if the late payment was reported by error when you have paid on time, then you can raise a dispute with the credit bureau online. Send proof of timely payment, and the credit bureau will investigate the issue. If your dispute is proved right, then the corresponding late payment record will be deleted from your credit report.

3. How long will a late payment stay on my credit report?

Late payment remains on the credit report for seven years since the day it was reported. However, the good news here is that the late payment impact reduces with time, especially if you have been consistent with your payments.

4. By how much points will my credit score drop due to late payment?

A late payment can cause your credit score to drop by as much as 80 to 100 points. This can cause your credit score to fall down a category from excellent to good, good to fair, fair to bad, etc.

5. How can I know if a late payment is recorded on my credit report?

If you notice a sudden fall in your credit score by 100 points or so, it may be because of a late payment. Request a copy of your credit report from an authorized credit bureau to check if it's due to a late payment. Note that all credit bureaus are required to provide one free copy of a credit score and credit report once a year. If you need your credit report more frequently, then you’re required to pay a subscription fee. Alternatively, you can also get an accurate credit report, and a detailed credit health assessment check from CreditMantri. The cost of our credit report packages starts at just Rs. 499 per year.

6. When is a late payment recorded on my credit report?

A late payment is recorded on the credit report when it is 30-days past the due date. Suppose you settle the outstanding before the 30-day-mark along with the late fee. In that case, it is usually not reported to the credit bureaus.

7. What can I do if I miss a credit card bill or loan EMI?

The best option here is to settle the outstanding and bring the account current as quickly as possible to minimize the impacts of the late payment on your credit rating.

8. How long does it take for my credit report to recover after a late payment?

It depends on where your credit score was initially before the late payment. Consistent on-time payments after the initial delay can help you in improving your score after the hit. Generally, it takes around 3 – 12 months to bring back your credit score to previous levels after a late payment, provided you’re on time with future payments.

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