How Do Late Payments Affect Your Credit Score?

Last updated on March 31st, 2024 at 09:07 pm


TransUnion CIBIL, or the Credit Information Bureau of India Limited, is an important organization that plays a role in determining a person’s creditworthiness when they apply for a loan or credit card.

A high CIBIL score increases the likelihood of approval, while a low score makes it more difficult to secure credit.

One factor that can negatively impact a person’s credit score is missed payments, and this article will explore the effects of missed payments on credit.


Reasons for Loan Rejection with a Good CIBIL Score:

Late Payment

Late payment can make it difficult for the person to secure loans or credit cards in the future, as lenders view missed payments as a sign of financial risk.

However, making timely payments on debts can demonstrate to lenders that the borrower is financially responsible and able to repay the money they borrowed.

What is Late Payment?

When a person borrows money from a lender, they are given a due date by which they must repay the debt.

If they fail to make a payment by this date, it is recorded as a late payment in the CIBIL and can have a negative impact on their credit score. See how to increase CIBIL score.

Summary of Late Payment Impact on Your Credit Score

Missing a credit card bill or loan payment can have varying effects on your credit score depending on the length of time it is delayed.

Less Than 30 days Late

If the payment is delayed by less than 30 days, the impact on your credit score is relatively minor, but you may be charged late payment fees and a higher interest rate. 

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30 Days Late

If you consistently miss payments by 30 days, it can negatively impact your credit score. Single late payments may be overlooked by lenders if you have a solid payment history, but if it becomes a recurring problem, it can significantly lower your credit score.

A significant decrease of 100 points or more can change your credit standing from excellent to good or fair.

60 Days Late

Missing a credit card or loan payment by 60 days can greatly harm your credit score. It will be reflected in your credit report, as most lenders notify credit bureaus of late payments on a monthly basis.

90 Days Late

If your credit card or loan payments are not made for a period of more than 90 days, it may be reported as a non-performing asset (NPA) on your credit report.

It’s important to note that different lenders may have different standards for determining what constitutes an NPA, with some considering 90 days late as NPA, while others set it at 120 days.

Having an NPA reported on your credit report can have negative consequences such as a lower credit score, limited loan options, and higher interest rates for a period of 7 years.

120+ Days Late

When you have failed to pay your debt for an extended period, it is often written off as a loss or sold to a collection agency.

Both of these events will be reported on your credit report, which will cause a significant decrease in your credit score.

How to Avoid Late Payment?

Set Due Dates to Your Calendar or Add a Reminder

Credit card companies usually let you choose when you want your payment due. It can be helpful to align them with your paydays or group them together to make it easier to remember.

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You can also set up notifications or reminders through text or calendar to remind you when a bill is due. If you need more than one reminder, you can set up multiple reminders to ensure you don’t forget.

Manage Your Account on a Routine Basis

Why not make Saturday morning your designated bill-paying time? Imagine, sitting with a hot cup of coffee, going through all your bills, and taking care of any payments that need to be made. 

By making this a weekly routine, you’ll never have to worry about those late payments or bills piling up again. Give it a try and see how much more organized and in control you feel!

Pick the Right Account Manager

Sometimes, life gets in the way and we’re not able to pay our bills on time. But don’t let that stress you out!

Consider enlisting the help of a trusted friend or partner to take care of these payments for you.

Another option is to hire an account manager, but make sure to choose someone with great organizational skills. 

And most importantly, stay informed about your account by checking periodically and keeping tabs on your spending.

This way you’ll have peace of mind knowing that your bills are being taken care of and you’re not overspending.

Set Automatic Payments

Setting up automatic bill payments is a breeze with most banks and credit unions. With this convenient service, you can easily choose the payment amount and schedule for your bills to be automatically deducted from your bank account each month. 

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This is particularly useful for loan payments, as the amount is fixed, and also for credit card bills. Say goodbye to the hassle of manually making payments every month, and let your bank do the work for you!

How to Improve CIBIL Score

To improve your CIBIL Score you must follow these tips: 

1) Consistently make payments on time each month

2) Keep your credit card usage below 40%

3) Keep your old credit cards open, even if you don’t use them

4) Check your credit report regularly

5) Limit the number of credit card applications

6) Avoid applying for multiple loans in a short period of time

7) Make sure to pay your loan instalments on time and in full

8) Work on building a long credit history

Final Thoughts

Late payments can lower your score significantly, and it may take several months for it to recover.

The best way to protect your credit is to pay all of your bills on time, including credit card bills, loan payments and other types of debt.

Additionally, you should check your credit report on a regular basis to make sure that all your payments are being reported accurately.

Author Bio:

Shiv Nanda is a financial analyst who currently works with MoneyTap, India’s first app-based credit-line. His friends always rely on him for advice on their investment choices, budgeting skills, and personal financial matters and when they want to get a loan. Shiv has made it his life’s mission to help and educate people on various financial topics. For your questions, you can reach him at

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