Missing a Personal Loan EMI? Here’s How It Can Damage Your Credit Score and Future Borrowing Power

Missing even a single EMI on your personal loan may look like a minor slip, but its impact on your financial profile can be far more serious than most people realize. A delayed payment can instantly pull down your credit score, weaken your creditworthiness, increase your future loan costs, and leave long-term marks on your credit report.

Understanding how a missed EMI affects your financial health can help you avoid costly mistakes and plan repayments wisely.

A Single Missed EMI Can Lower Your Credit Score by 50–70 Points

Your credit score is largely driven by your repayment history, and lenders treat any missed EMI as a sign of financial stress. As soon as you fail to pay an instalment by the due date, credit bureaus like CIBIL, Experian, Equifax and CRIF High Mark record the delay.

• A single missed EMI can reduce your credit score by 50–70 points.

• If the delay extends beyond 30 days, the drop can be as steep as 90–100 points.

• These negative entries remain on your report for years, affecting future loan approvals.

Since repayment history carries the highest weightage in credit scoring, even one late payment can create a long-lasting dent in your financial reputation.

Late Fees, Penalties and Risk of Loan Default

Missing an EMI does not just hurt your credit score — it also attracts additional charges and complications:

1. Late Payment Fees

Most lenders charge 1% to 2% of the pending EMI as a late fee.

2. Penal Interest

Apart from regular interest, an additional penalty interest is applied on the overdue amount until repayment is made.

3. Risk of NPA Declaration

If an EMI remains unpaid for 90 days, lenders may classify your loan as a Non-Performing Asset (NPA).
This severely damages your credit and reduces your chances of securing any new loan in the future.

4. Collection Calls and Legal Action

Repeated defaults may lead to:

• Frequent collection calls

• Recovery agent visits

• Written reminders

• Legal notices in severe cases

A default record stays on your credit report for a long time, making personal loans, home loans or even credit cards harder to obtain.

Why Missed EMIs Hurt So Much

Lenders view timely repayment as the strongest indicator of your financial discipline. A delay suggests:

• Poor money management

• High credit risk

• Reduced repayment capacity

This makes banks hesitant to offer loans, and if they do, it may come with higher interest rates, lower loan amounts and stricter verification.

How to Protect Your Credit Score

To avoid the long-term consequences of a missed EMI, here are some smart steps you can take:

1. Enable Auto-Debit

Set up auto-debit or standing instructions so your EMI is automatically deducted from your bank account on the due date.

2. Maintain an Emergency Fund

Keep an emergency reserve equal to at least three months of EMIs to manage unexpected financial disruptions.

3. Opt for Loan Restructuring

If you are struggling temporarily, contact your lender to request:

• EMI rescheduling

• Loan restructuring

• Moratorium (when available)

This is always better than silently missing payments.

4. Monitor Your Credit Report

Check your credit report regularly. If you notice any incorrect entries, immediately raise a dispute with the respective credit bureau.

5. Seek Financial Advice

If you frequently find yourself running short on funds, consult a financial advisor for budgeting and repayment planning.

EMI Missed? It’s Not a Small Mistake

An EMI miss is never a small oversight. It weakens your credit profile, pushes up borrowing costs and limits financial opportunities for years. With disciplined money management, timely repayments and smart planning, you can safeguard your credit score and maintain strong financial credibility.