EMI: Missed a personal loan EMI? It could have a serious impact on your credit score...

If you've recently missed your personal loan EMI or delayed a payment in a month, it's no small matter. Doing so can have a significant impact on your financial health and credit score. Many people think that a one-time delay won't make a difference, but in reality, the impact can last for years.

Missing an EMI Directly Impacts a Credit Score

Credit bureaus like CIBIL, Experian, Equifax, and CRIF High Mark track all your loan and credit card payments. Missing even a single EMI can immediately drop your score. Missing an EMI can result in a 50 to 70 point drop in your score. If a payment is 30 days late, your score can drop by 90 to 100 points.

Your credit score depends on how timely you make your payments. If your payment history is clean, your score remains high. However, one mistake can weaken your entire profile.

Your image is tarnished in the eyes of the bank.
When you don't pay EMIs on time, the bank considers it a lack of financial discipline. This means the bank believes you're weak in financial management or have unstable income. This can hurt your future loans. Whether you apply for a home loan, car loan, or credit card, the bank assesses your record to determine whether you're trustworthy.

Late Fees, Penalties, and the Risk of Default
If you miss an EMI for a month, the bank charges a late fee or penalty of 1% to 2%. Additionally, penal interest is added to the overdue amount. If payments remain pending for more than 90 days, the bank declares the account an NPA (Non-Performing Asset). This means the loan is now in the default category, significantly damaging your credit history.

What happens after default?

If you repeatedly miss EMIs, the bank may initiate recovery action against you. This may include calls, messages, or visits from recovery agents. In serious cases, the bank may also initiate legal action under the Indian Contract Act.

And most importantly, once a default is recorded on your credit report, it remains for 6 to 7 years. This means that you may face difficulty in obtaining a new loan or credit card from any bank for this period.

How to avoid this situation?
If you want to protect your credit integrity, take some simple steps:

Set up Auto-Debit: So that EMIs are automatically deducted every month.

Build an Emergency Fund: Save at least 3 months' worth of EMIs so that payments don't stop in case of any emergency.

Speak to the lender: If you have payment issues, speak openly with the bank. Sometimes the bank offers the option of restructuring or a moratorium.

Consult a Financial Advisor: If your income is unstable or your debt has increased, seek guidance from an expert.

Check your Credit Report: Check your credit report regularly. If you notice any discrepancies, immediately report them to the relevant bureau.

A missed EMI isn't just a mistake; it's a warning.
Many people wonder if a month's delay will make a difference, but in reality, it's the first test of your financial discipline. Missing an EMI not only lowers your score but also signals to the bank that your payment habits are unreliable. This can lead to problems like loan approval difficulties, higher interest rates, and lower credit limits.

Missing a personal loan EMI should never be taken lightly. One mistake can leave a stain on your financial record for years. Therefore, always pay EMIs on time and in full. If you have a problem, talk to the bank, don't hide it, because only transparency and timely action can protect your credit health.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.