If you have ever taken a loan or used a credit card, then the name of “Credit Score” must have been heard. This is a number of three digits, which tells how responsibly you handle your money. When you fill EMI on time or pay the bill, this score remains good. But if you have never been able to fill the EMI of a month on time, that is, once there is a lapse, then this score can fall. Now the question arises, does just one time mistake make so much difference? Let us understand that if you miss EMI once, then how much effect can be affected on the credit score and why this small lapse can become a big problem.
Loss depends on how late it was
If your EMI is late 1 to 7 days, then banks usually ignore it. In such cases, the score does not have much effect. But if the delay is 30 days, then the matter becomes serious. This thing is recorded in the report and your score may fall from 50 to 100 numbers. If the delay reached 60 to 90 days, the bank and the credit bureau consider it to be a serious default. The score goes down rapidly and can be difficult to take a loan next time. And if it is more than 90 days, then banks can declare your loan account as NPA i.e. Non-Performing Asset. This means that you are no longer reliable borrowers. In such a situation, not only the score falls, but any bank can refuse to give loans.
EMI lapse has a direct impact on your record
The largest part of the credit score rests on your payment history. This simply means that you have paid EMI and bills on time till now. If your old history has been good, then one -time delay will not kill a lot. But if your record is already weak, then another omission can drop the score straight down. For example, if you first delay 30 days, the score may fall up to 100 points. And if such a mistake is repeated repeatedly, then there may be a decline of 150 to 200 points. In many cases, the score of people falls from 750 to 600 or even below. It becomes very difficult to get a loan as soon as you reach this level, no matter how good your salary is.
It takes a big time to improve the score
If you have made a mistake then do not be disappointed, because the credit score is not bad forever. As soon as you start filling EMI and bill on time, the score slowly starts climbing up. Normally, paying at the right time continuously for 3 to 6 months starts showing a difference. If you have not been able to fill the EMI of a month, then the best way to talk to the bank. You can take the option of restoration of loan installments again or relief for some time. Along with this, keep in mind that the entire bill of the credit card should be repaid on time. Do not try to escape by paying minimum payments, otherwise both interest and score will be affected.