How do late payments affect your CIBIL score? MintGenie explains
Not only defaults, even late payments can have a significant adverse impact on your CIBIL score, since it is a measure of your creditworthiness. Your CIBIL score is calculated based on a number of factors such as payment history, credit utilisation, length of credit history, new credit inquiries and types of credit accounts.
Late payments indicate to lenders that you may be a higher credit risk because you have not been able to meet your financial obligations on time. In case you happen to miss a payment deadline, it usually gets reported to credit bureaus such as CIBIL, and this information can stay on your credit report for several years.
A single late payment can cause a temporary drop in your score, while multiple late payments or consistently late payments can result in a more significant and longer-lasting negative impact.
In addition to lowering your CIBIL score, late payments can also make it harder for you to qualify for new credit in the future and may result in higher interest rates when you do get approved.
Therefore, it's crucial to always make your payments on time to maintain a good credit score and financial health. If you're having trouble making payments, consider reaching out to your creditors to discuss options for repayment or financial assistance.
They can have significant effect on your score significantly since the score is a measure of creditworthiness.
The severity of the impact depends on factors such as how late the payment was, how frequently you have been late and the overall health of your credit history.
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While it may not be an immediate solution, working to improve your credit score over a period of
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