EMI, CIBIL Score: Loans and Equated Monthly Installments (EMIs) are intricate financial matters, where even a single day’s delay can incur significant costs. Failing to make an EMI payment can result in substantial penalties and adversely affect your credit score. Given that lenders have become more stringent in their policies, it is crucial for borrowers to understand the consequences of late payments and the strategies to prevent them.
The penalties associated with late EMI payments can differ based on the lender and the specific terms of the loan. According to the recent guidelines from the Reserve Bank of India (RBI), an account will only be classified as overdue if it remains unpaid for more than three days from the date specified in the billing statement.
Neglecting an EMI payment can severely impact your credit score, with the extent of damage increasing as the default date approaches. Typically, a credit score reflects the last 36 months of credit activity, making it essential to take prompt action to mitigate potential harm. Settling the missed EMI promptly and establishing automatic payments can help avert future defaults, thereby protecting your credit score and credit utilization ratio.
This is how you can save your CIBIL score
If you find yourself unable to pay an EMI, the initial step to address the situation should be to contact your bank’s customer service. Maintaining open and timely communication is vital in such circumstances. Many banks have policies that allow for the waiving of late fees or offer temporary relief options. Reaching out to customer service promptly can help lessen the impact, and discussing your situation with the bank can also prevent damage to your credit score.