Author
LoansJagat Team
Read Time
10 Min
04 Apr 2025
The Impact of Late Payments on Your Credit Score – Fix It Fast
Arjun, a 28-year-old from Delhi, never worried about credit card payments. "Ek do din late ho gaya toh kya? Bank wale thodi ghar aa rahe hain!" he would joke. One evening he tried to secure a home loan, yet the bank rejected his request.
Reason?
A low credit score of 580.
He checked his credit report and discovered 3 late payments on his credit card account. His late payment of ₹10,000 by 45 days resulted in almost 100 points being deducted from his credit score. One mistake on his record would stick with him for 7 whole years.
Arjun decided to make important changes, which included 3 basic actions:
- Set auto-debits for all his EMIs and credit card bills.
- He paid all overdue debts and asked his bank to remove the penalties from his account.
- He managed to pay his bills on time regularly, which resulted in a score increase from 600 to 720 within 12 months.
People often fail to understand how minor payment delays affect their credit scores, just like Arjun did initially. This blog will demonstrate how late payments affect your credit score and recommend solutions to improve it before significant opportunities slip away.
Late Payment = Credit Score Ka Villain
A late payment emerges unexpectedly, just like a Bollywood villain to damage your financial standing. The range of credit scores in India extends from 300 to 900, and this score decreases substantially when you fail to meet payment deadlines. Failure to make a single EMI payment or credit card bill reduces your credit score by 50-100 points.
The good news? You still can make the heroic comeback!
Let's take the example of Arjun, who paid for a ₹5000 dinner through his credit card while planning to cover the expense the following month but forgot to do so. A 60-day default payment resulted in the bank lowering his credit score from 750 to 640.
6 months down the line, he took a car loan of ₹5,00,000, but because of his low credit score, the bank charged him 14% interest instead of 10%, adding ₹50,000 to his overall cost of interest over 5 years!
To recover, Arjun:
- Settled all his outstanding debt obligations immediately.
- Began paying his bills ahead of their due dates.
- Used just 30% of his available credit to prevent getting caught in debt traps.
Within 10 months, his credit score was back at 730. One brief setback had cost him thousands, yet regular payments paid off.
Avoid letting one delayed payment bleed away your future pay!
Kitna Late? The 30-60-90 Rule!
Credit card bills and loan EMI payments do not automatically notify credit bureaus like CIBIL or Experian when you are late. The timing of your payment determines the degree of effect on your credit score:
Delay | What Happens? | Credit Score Impact | How Arjun Benefitted |
1 to 29 Days | Late fee charged but not reported to CIBIL/Experian. | No immediate impact (if paid before 30 days). | Paid a ₹500 late fee, but the score stayed at 750. |
30+ Days | Reported to credit bureaus as a ‘late payment’. | The score drops by 50-80 points. | Arjun’s score dropped to 690, increasing his car loan interest rate by 1%. |
60+ Days | Additional late fees, higher interest and collection calls. | The core drops by 100-150 points. | His score fell to 630, increasing his home loan EMI by ₹2,000/month. |
90+ Days | Marked as a ‘default’; accounts may go to collections. | The score drops by 150-200+ points. | A drop to 600 led to loan rejection and credit card limit reduction. |
Bure Din? Late Payment Ka Asli Nuksaan
With Arjun's genuine experience, an overdue payment produces the following consequences:
- Interest Rates Ka Jhatka
- People with lower credit scores must pay 2% to 3% higher interest, paying thousands more.
- Arjun's Case: His credit score went from 750 to 690, raising his car loan interest from 10% to 12% and increasing his EMI by ₹1,500/month over five years.
2. Loan Rejections
- Banks don't want to lend to 'late payers'; a score less than 650 may result in immediate rejection.
- Arjun's Case: His credit score dropped to 630 following several late payments. When he applied for a home loan of ₹40,00,000, the bank turned down his application because of high credit risk.
3. Credit Limit Ka Kantaap
- Missed payments can cut your credit limit by 30-50%, lowering your spending power.
- Arjun's Case: His credit card limit was ₹1,00,000, but after three late payments, the bank cut it to ₹70,000, limiting his financial flexibility.
4. CIBIL Score Ka Heartbreak
- One 60-day late payment can lower your score by 100+ points, pushing back big financial goals.
- Arjun's Case: A ₹15,000 credit card payment made 65 days late lowered his score by 120 points, making it more difficult for him to secure a personal loan for his sister's wedding.
Mere Paas Paisa Nahi! What If You Can’t Pay?
It is crucial to address financial difficulties when money runs low. Arjun provides real-life examples that demonstrate how to address this issue with the following steps:
Solution | What to Do? | Arjun’s Case (Numerical Impact) |
Call the Bank | Request a grace period to avoid a late fee and CIBIL report. | Called the bank for a ₹10,000 credit card bill, got a 7-day extension, and avoided a ₹1,000 late fee and score drop. |
Convert to EMI | Convert hefty credit card dues into EMIs for better affordability. | Instead of paying ₹50,000 at once, convert it to a 6-month EMI at 14%, reducing the monthly burden to ₹8,900. |
Prioritize Essentials | Pay secured loans (home, car) first, then unsecured loans (credit cards, personal loans). | Delayed a ₹5,000 credit card payment to ensure his ₹15,000 home loan EMI wasn’t missed, avoiding a 30+ point score drop. |
“Ab Tera Kya Hoga, Kaaliya?” - How Credit Bureaus React
Credit bureaus like CIBIL, Experian, Equifax, and CRIF High Mark track your repayment history closely. A single missed payment remains on your record for seven years.
Read More – Why Is Your CIBIL Score Not Improving Despite Timely Payments
Your late payment record can diminish as time passes, but only if you consistently show responsible payment behaviour.
Time After Late Payment | Impact on Credit Score | Arjun’s Case (Numerical Impact) |
Immediately (0 to 30 days) | Minor impact if paid within 30 days. | Paid ₹5,000 late by 15 days and got a ₹500 late fee but no CIBIL impact. |
30 to 90 Days | The score drops 50 to 100 points, affecting loan approvals. | Paid ₹10,000 after 60 days, the score dropped from 750 to 640, increasing loan interest rates. |
6 to 12 Months | Impact starts reducing if no further late payments occur. | Arjun paid bills on time for 12 months; his score improved from 640 to 700. |
2 to 7 Years | Older late payments have minimal impact on the score. | After 3 years, the late payment barely affected Arjun’s loan approvals. |
Fix It Fast: The Ram Bharose Nahi, Smart Approach
The following tactical approaches will help you repair damage from late payments:
- Set Up Auto-Pay: Auto-debit EMIs and credit card payments to miss no due dates.
Arjun's Case: He set up auto-pay for his ₹12,000 credit card bill, averting a possible 50-point score decline.
2. Pay Partially If Full Isn't Possible: Some banks do not report part payments as late if you make at least the minimum payment.
Arjun's Case: He couldn't pay ₹10,000 in cash, so he made a partial payment of ₹2,000 to prevent CIBIL reporting. However, he also had to give an additional ₹500 as interest.
3. Negotiate With Your Bank: If this is your first default, ask the bank not to report it to the credit bureau.
Arjun's Case: His payment was 5 days past due, but he contacted the bank, and they removed the late fee and did not report it.
4. Dispute Errors: Monitor your credit report periodically and dispute any errors.
Arjun's Case: He discovered an erroneous late payment record on his CIBIL report, raised a dispute, and regained 40 lost points.
Debt Consolidation: Ek Saath Sabka Solution
It combines your several outstanding debts into a new loan with a single monthly payment and a reduced interest rate to help you lower your financial stress.
Arjun’s Case: Before vs. After Consolidation
Loan Type | Amount | Interest Rate | EMI (₹/Month) |
Credit Card Bill | ₹50,000 | 36% | ₹4,500 |
Personal Loan | ₹1,20,000 | 18% | ₹6,000 |
Bike Loan | ₹80,000 | 14% | ₹4,000 |
Total (Before Consolidation) | ₹2,50,000 | Varied | ₹14,500 |
New Loan (After Consolidation) | ₹2,50,000 | 12% | ₹9,500 |
Monthly Savings: ₹5,000
Simpler Control: One EMI in place of three
Improved Credit Score: No late payments, better financial well-being
Late Payment Alert? Prevention > Cure
Dhandha samajhkar chalao apne finances! Avoiding late payments rather than correcting them later is always preferable. Take these prevention hacks:
- Use Calendar Reminders: Schedule reminders for due dates to prevent missing payments.
Arjun's Case: He scheduled a Google Calendar reminder for his credit card bill and never missed a due date.
2. Select the Optimal Due Date: Coordinate EMI and credit card due dates with the salary credit date for hassle-free payments.
Arjun's Situation: He asked his bank to change his due date from the 5th to the 10th so that he would have money after salary credit.
3. Have an Emergency Fund: A little emergency fund is enough to pay EMIs during liquidity shortages.
Arjun's Case: He has saved ₹20,000 as a buffer amount for emergencies, which assisted him in paying an EMI on time when sudden expenses crept in.
Rebuilding Your Score: “Paisa Hi Paisa Hoga!”
Lost credit points? No worries! These steps will help you both recover and enhance your credit score.
Steps To Rebuild Your Credit Score (Arjun’s Case)
Step | Action Taken | Impact on Arjun’s Credit Score |
Pay Bills on Time, Every Time | Made 6 consecutive on-time payments after a late payment. | The score improved from 680 to 730. |
Reduce Credit Utilization | Lowered credit usage from 80% to 25% of the credit limit. | The score increased by 40 points in 3 months. |
Maintain Old Credit Accounts | Kept his 5-year-old credit card active to maintain his credit history. | Helped in sustaining a stable score. |
Take a Secured Credit Card | Took a ₹20,000 FD-backed credit card after his score dropped. | The score improved from 620 to 690 in 6 months. |
Conclusion
A healthy credit score leads to financial stability, better loans, and reduced interest rates. High credit utilisation and late payments can bring it down, but prudent measures can regain lost points and create a stronger financial future. Minor measures such as setting bills on time, reducing credit utilisation, keeping old accounts open, and using secured credit cards can get your score back on track.
Arjun's story demonstrates that discipline and patience are the secrets to credit rebuilding. Consistency is the true game-changer, whether you're preventing or correcting errors or correcting them. Take control of your finances today—a good credit score isn't a number; it's your ticket to financial freedom!
FAQs: Aakhri Sawaal, Aakhri Jawaab!
- How many late payment days impact my credit score?
If your payment is 30+ days late, banks report it to credit bureaus, which hurts your score.
- Can I repair my credit score after late payments?
Yes! On-time future payments, low credit utilisation, and disputing can repair your score.
- How long does a late payment remain on my credit report?
It stays for 7 years, but its effect weakens over time.
- Can I ask my bank to have a late payment report deleted?
If it's a one-time error, a few banks will do it. Otherwise, you'll just have to let it age out.
- Will paying the minimum amount due on my credit card prevent a late fee?
Yes, but it won't save you from a high interest rate on the unpaid balance.
About the Author
LoansJagat Team
We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?
Quick Apply Loan
Subscribe Now
Related Blog Post
