How Missing a Single Payment Affects CIBIL Score/Credit Score

Q: How long does CIBIL keep track of the defaulter?

The Credit Information Bureau of India keeps the borrowerâs information for a minimum of seven years from the date of the first payment default.

A CIBIL score is a three-digit number that represents an individual’s creditworthiness. It is used by banks and other financial institutions to evaluate an individual’s creditworthiness when they apply for loans, credit cards, and other financial products. A high CIBIL score indicates that the individual has a good credit history and is likely to be a responsible borrower, while a low CIBIL score may indicate that the individual has a poor credit history and may be a higher risk for lenders.

Missing a single payment can have a significant impact on an individual’s CIBIL score. When a payment is missed, the lender typically reports it to the credit bureau, which updates the individual’s credit report and affects their CIBIL score.

In this article, we will discuss how missing a single payment can affect an individual’s CIBIL score and what steps they can take to minimize the impact.

How a Missed Payment can Affect CIBIL Score?

A single missed/delayed payment has a long-term negative impact on the CIBIL score and may hurt the borrower’s creditworthiness. Furthermore, a low CIBIL score results in the rejection of loan or credit card applications. In short, to maintain a good credit score it is imperative to make timely payments and adhere to all of the CIBIL score-based best practices.

It can be further explained as follows:

The impact and severity of a missed payment are so high that a borrower must work hard for months, if not years, to regain a good credit score.
Payment defaults are classified into two types: minor and major. These are further explained as follows:
Minor payment defaults occur when a borrower misses or delays payment for less than 90 days. Such defaults are regarded as minor because banks and lenders believe they will be resolved quickly. However, the CIBIL score gets temporarily impacted here.
Major payment defaults occur when a borrower pays the credit amount but does so after 90 days. In this case, the CIBIL score suffers as a result, and the borrower loses the status of a good debtor. Furthermore, major payment defaults and a low CIBIL score both hinder loan/credit card approval.

It is recommended that both major and minor payment defaults be addressed and cleared as soon as possible.

Also Read: Factors that affect Credit Score Negatively

How to Improve CIBIL Score?

Any type of payment default will have a negative impact on your CIBIL Score. A low CIBIL score also makes it difficult to get approved for a loan or credit card. Here is how you can improve the CIBIL score:

Be disciplined with the credit repayment
Never leave any unpaid debts
Maintain a credit utilization ratio of 30% or less
Don’t make multiple credit card inquiries or hard inquiries
Keep old credit card accounts open
Examine your credit score twice a year
Resolve the late payment issues as soon as possible

Read More: Impact of Late Payment on CIBIL Score

How Can I Avoid Making Late Payments?

There are numerous ways to avoid late payments; however, it is the borrower’s responsibility to follow a few practices-

Select the automatic debit option. This feature deducts a specific credit amount from the borrower’s bank account every month
Set up reminders for credit payment due dates and the deadline for payment
Convert outstanding payments into EMIs monthly

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FAQs

Is it possible that a single day of late payment will affect my credit score?

Even a single late payment can have a negative impact on a borrower’s credit score, especially if the borrower has a good or excellent credit score.

Does a 7-day late payment affect credit score?

A late payment that is less than 30 days past the due date is less likely to have a significant impact on an individual’s credit score. However, a payment that is 30 days or more past the due date is considered to be a “serious” delinquency, and it can have a more significant impact on the individual’s credit score.

It is also important to note that, even if a late payment does not have a significant impact on an individual’s credit score, it can still affect their ability to obtain credit in the future.

How long does it take to recover from one late payment?

The amount of time it takes to recover from a late payment will depend on several factors, including the individual’s credit history, the severity of the late payment, and the specific credit scoring model used.