A credit score is a three-digit score that helps lenders gauge your creditworthiness. Lenders carefullyanalyse it while evaluating your loan application and therefore, it’s important to ensure you have a high score. Your credit score can take a hit due to several reasons with the most common being delay in EMI payment. This article talks about how this delay can affect your credit score and ways to avoid it.
The quantum of damage
The damage suffered by your credit score due to delayed EMI payment depends on the following factors:
- The number of days delayed
- Your credit history
If you miss out on EMI payment by a day or two, the effect on your credit score may not be much. However, if the delay is close to a month or more, then there are chances of your credit score taking a severe beating.
Also, if your credit history shows that you have delayed on EMI payment before, any further delay can significantly dent your score. You need to clear your existing debt on time to maintain a good CIBIL score.On the other hand, if the delay is for the first time, the damage is a little less.
A delay in EMI payment stays in your credit history and report for quite some years. It may take some time, sometimes more than 5 to 7 years, for this to get removed. It has a long-term repercussion, especially while availing loans in the future.
How to ensure you don’t delay EMI payment?
There are various ways to ensure you don’t delay EMI payment. Some of them are:
- Automate payments
It is one of the most effective ways to ensure you pay the EMIs on time. You can automate payments in two ways. Firstly, you can give standing instructions to your bank to debit the EMI amount directly from your account within a set date. Known as ECS mandate, the bank deducts the EMI amount which gets credited into the lender’s account.
Secondly, you can automate payments via net banking. Like an ECS mandate, you fill up a form and the said amount is debited from your account on a given date. If you are a salaried employee, it’s prudent to set up the mandate close to the date when your salary is credited into your account.
- Opt for a loan with a competitive rate of interest
The rate of interest has a direct bearing on the EMI amount. Thus, opt for a loan with a competitive rate of interest which keeps EMIs on the lower side. For instance, Bajaj Finserv Personal Loan is available at an interest rate which makes EMI payment easy and hassle-free.
Also, Flexi Loan facility on this loan ensures that you pay interest only on the borrowed amount and not on the entire loan limit. This keeps EMIs in check, thus lowering chances of a default. Also, pre-approved offer makes it easy to avail finance. To know your pre-approved offer, share a few basic details.
While applying for a loan, it’s prudent to know your credit score. A high score, above 750, can help you avail the loan at competitive terms and conditions. So, how to know credit score? You can know it through various credit information companies (CICs) or third-party fintech websites. According to the rules, you can know your score for free once in a year from these CICs:
- TransUnion CIBIL
- High Mark
To check credit score from third-party fintech websites, enter your name, PAN number, date of birth, phone number and email id.