IndiaLends Advisory

By IndiaLends Advisory

Feb 02, 2018

How late EMI payment can affect your credit score?

There are plenty of reasons because of which you could be late for an EMI payment on your loan or credit card. Your primary concern at that time would be to make the payment as soon as possible and make sure that your relationship with your lender is not damaged. Something that might not be on the top of your mind at that time is your credit score. However, it should be! Late payment of EMI can affect your credit score as well.

Don’t miss out on knowing more about why your credit score is important, here.

“Can one late EMI payment affect my credit score?”

In short- yes, one late EMI payment can also affect your credit score.

The amount of effect depends on two main factors:

We will discuss both of these in the subsequent sections.

“I was late by just one day. How will it affect my credit score?”

If the payment is late by a day or two, the effect would probably not be very significant. In such a situation, what you really need to be worried about is the late charges the bank is going to charge you.

However, if your payment is late by more than a day or two, you really need to be worried. A 20-30 day late EMI payment can affect your credit score even as much as 90 points.

“I have had late EMI payments before. How many points will I lose this time?”

The answer to this is subjective and depends on your credit history. If you are someone who has had other late EMI payments in your recent credit history, the effect of another late payment would be much worse. If this is your first late EMI payment, the effect would be significantly less.

Let’s take an example: Say you were late for a credit card payment a few months back. Last year you were late for a personal loan EMI payment. This will reflect in your credit history negatively. Now if you are late for another EMI payment, your credit score will drop significantly. This would not be the same case when you are late for a payment for the first time.

“How long will late payment stay on my credit report?”

When a late EMI payment is recorded in your credit history, it will stay on your credit report for 6 to 7 years. This is how long it takes to remove a late EMI payment from your credit history.

“I was late for an EMI payment. What should I do now?”

Well, the first thing you need to do is make the payment, as soon as possible. Pay it today if you can. The sooner you make the payment, the less effect it will likely have on your credit score.

Consider taking the following two steps to help you stay on track with your EMI payments in the future: