How does a missed EMI affect your CIBIL Score?

Your credit score is like a report card for how you handle money. Banks and financial companies use it to decide whether to give you a loan or credit card. The score ranges from 300 (very poor) to 900 (excellent). Since your credit score is based on all your loan and credit card payments, missing even one payment can hurt you significantly.

Did you know that one missed payment can affect your ability to get a loan approved for years to come? If you're worried about your credit score or planning to apply for a personal loan soon, understanding how missed payments work is really important. In this guide, we'll explain exactly what happens when you miss an EMI payment and how you can protect your credit score.

First: Your score drops right away

When you miss a payment, your CIBIL score falls immediately. Depending on how good your score was before, it could drop by 50 to 100 points or even more. This sudden drop makes it much harder to get new loans approved.

Second: You'll pay higher interest rates

Even if a bank agrees to give you a loan after you've missed a payment, they'll charge you a higher interest rate. Why? Because they see you as a riskier borrower now. You'll have to pay more money every month, and the total cost of the loan will be much higher.

Third: You'll face additional fees and penalties

When you miss an EMI payment, your lender will usually charge you a late fee. Plus, you'll have to pay interest on the amount you didn't pay. These charges add up quickly, making it even harder for you to catch up on your payments. You might owe more than you originally thought.

⚠️ The serious impact of missed payments:

A missed payment can stay on your credit report for up to seven years. Yes, seven years! This is a long time, and it can significantly hurt your score during all those years. If banks see that you have a history of missing payments, they might think you're a high-risk borrower. This means they might refuse to give you a loan at all.

Understanding minor and major defaults

It's important to understand that not all missed payments are treated the same way. There are two types of defaults, and they have different impacts on your credit score:

Minor defaults (less serious)

Minor defaults refer to payments that have been delayed or missed for a period of less than 90 days. These defaults do hurt your CIBIL score, but the damage is usually temporary. The good news is that if you start paying on time again, your score can recover. Timely payment of subsequent bills following a minor default can help you correct the damage.

Major defaults (very serious)

Major defaults occur when an individual fails to make payments for a period exceeding 90 days, and the account is classified as a non-performing asset. This is serious and can severely damage your credit history. Banks will see you as someone who doesn't pay back loans, and they'll be very reluctant to lend you money. This can affect your ability to get loans for many years.

The key difference is this: minor defaults can be fixed if you act quickly. But major defaults have lasting damage. That's why it's so important to never let a missed payment go beyond 90 days.

The good news is that you have control over this. The most important thing you can do is to make your payments on time. Here are practical steps:

Set up automatic payments or reminders

The easiest way to never miss a payment is to set up automatic payments with your bank. This means the money will be automatically transferred from your account on the due date. You don't have to remember anything – it just happens. Alternatively, set reminders on your phone to ensure that you never miss a payment.

If you do miss a payment, act fast

If you accidentally miss a payment, contact the lender as soon as possible to catch up on the missed payment. The faster you catch up, the less damage it does to your credit score.

Check your credit report regularly

It's also a good idea to regularly check your credit report to ensure that all of your information is accurate. Errors on your credit report can negatively impact your score, so it's important to address any errors as soon as possible.

Track your CIBIL score with Credit Pass

With the Credit Pass subscription, you can track your CIBIL Score and access a personalised Credit Health Report. It helps you understand the key factors affecting your score and manage your credit profile effectively—making it easier to secure a personal loan when needed.

If you are looking to get a personal loan, the process is simple and easy:

✅  Check your pre-approved loan offer with phone number and OTP → Apply online in 5 minutes → Receive funds within a day*.

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