When does your CIBIL score decrease if you don't make timely payments? Learn about credit card accounting.
Credit cards have become a companion in today's times, giving you the freedom to spend without having money in your pocket. People often use them, but when it comes time to pay the bill, they forget.
In today's busy lifestyle, everyone needs money. Sometimes it's shopping, sometimes medical treatment, or sometimes emergency money, a credit card has become the easiest way to do so. Credit cards have become a companion in today's times, giving you the freedom to spend without having money in your pocket. But often, people treat it as a loan and spend it, but when it comes time to pay the bill, they either forget or wonder what difference a day or two's delay makes. But even a delay of a day or two can land you in serious trouble, especially with your credit score. When your score drops, it not only makes it difficult to get a loan but also impacts your creditworthiness. So let's understand when your CIBIL score decreases due to non-payment on time.
What is a CIBIL score, and why is it so important?
Whenever you obtain a credit card or loan, a credit record is created. Based on this record, your CIBIL score is calculated. This score ranges from 300 to 900. A score above 700 is considered good, and if it falls below this level, banks hesitate to grant you a loan. Banks use this score to determine your trustworthiness. If you've paid your previous loan or credit card bills on time, your score will be good. However, if you delay payments, your score begins to drop, and this is where the problems begin.
When does your CIBIL score decrease due to non-payment on time?
If you pay your credit card bill even 1 or 2 days late, it's usually not a major problem. Banks consider it minor. This information isn't sent to CIBIL or other credit agencies, and it doesn't impact your score. If you don't pay your bill for a week, it's still not reported to CIBIL, but banks do take note, and repeated delays can impact your credit profile. A delay of 15 to 30 days can cause a CIBIL score drop of 50 to 100 points, depending on your past credit history. If your score is already low, it may drop even further.
CIBIL Score for Delays of More Than 30 Days
If you don't pay your credit card bill for more than 1 month, banks report it to agencies like CIBIL. Your score can drop by 90 to 110 points. This information remains on your report for up to 6 years. Even after this, if you don't make a payment for two months, banks consider it a default. Your score can drop by 130 to 150 points. Furthermore, if you don't pay your bills for more than four months, your credit profile is virtually ruined. Getting a loan in the future becomes extremely difficult, interest rates can be very high, and many banks may even blacklist you.
