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How does Late or Missing a Payment Affect CIBIL Score?
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How does Late or Missing a Payment Affect CIBIL Score?
TransUnion CIBIL, known as Credit Information Bureau of India Limited, holds significant importance in the loan and credit card application process. A higher CIBIL score enhances the likelihood of loan or credit card approval, while a lower score poses challenges for borrowers.
CIBIL, or credit, relies on several factors such as overdue payments, outstanding debt, and credit usage ratio. In this article, we’ll explore how delayed payments can impact your creditworthiness.
What does late payments mean?
Late payments occur when customers fail to repay credit card bills or loans by the due date specified by lenders. Such instances are recorded by CIBIL as late payments, leading to an immediate drop in the credit score. Rebuilding the score can be time-consuming, even with good credit habits.
Lenders view late or missed payments as significant red flags when assessing a borrower’s eligibility for loans or credit cards. Borrowers with a poor CIBIL score may struggle to secure credit, as they are perceived as high-risk applicants. Conversely, timely repayments serve as an indicator of financial responsibility and reliability to lenders.
How does a late or delayed payment impact your CIBIL Score?
Delayed payments can significantly impact CIBIL scores, resulting in reduced chances of loan or credit card approval. Additionally, failure to pay outstanding credit card bills or loan installments minimizes the likelihood of loan approval.
To enhance your CIBIL score, consider the following steps:
- Ensure timely payments each month.
- Maintain a credit utilization ratio below 40%.
- Avoid closing older or unused credit card accounts.
- Regularly review your credit report.
- Refrain from applying for multiple credit cards or Fast Cash Loan within a short period.
- Make full and timely payments of loan installments.
- Aim to establish a strong credit history.
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