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A late payment will surely reflect on the credit history for a long duration. If you want to make sure that there is no mention of late payments in your credit score, you should be making your payments on proper time.
It is usually seen that if late payments are recorded on your credit report, your credit score will come down and you will be seen as a less creditworthy individual. The most important criteria of maintaining a good credit score are by not letting your payments get late. It is usually seen that continuous delay in the repayment of dues will impact the credit score in a negative way.
What is the Impact of Late Payments on CIBIL?
Credit Score is dependent on various factors. But the impact of late payments on CIBIL is the most when compared to others. If you have made only one late payment after maintaining a good credit score since a long time, there will be a huge impact on your credit score in a negative way. It has been observed that the impact of one late payment on your credit score will reduce your score by 80 points.
Key Factors Related To Missed Payments that Impact Your Credit Score
- How recently have you missed a payment?
- The duration (the number of days) by which you have missed the payment.
- The frequency of the payments that have been missed. Greater the frequency of your late payments, the greater is the impact of it on the CIBIL score.
Important Tip for Borrowers
It is advisable for the new borrowers of home loans that they check their CIBIL Report and ensure that timely payments have been made for a year prior to taking the loan. This will enhance your credits score and you will achieve the power to borrow and negotiate for the rates suitable to you.
Ways in Which Late Payments Impact Credit Score:
- Penalty for Late Payment
There is a penalty for late payment. In case you have missed the next payment, there will be a penalty charged again and this amount will keep on accumulating to the entire amount that you need to pay the lender.
- Risky Borrower
If you are one among those who have made late payments to their lenders, you will be considered as a borrower who is risky. In such a scenario, the interest rates for your loans will be high.
- Bad Impact on Credit Score
One late payment will also affect the credit score in a negative manner. This effect will usually stay on your credit report for a long time.
- Types of Late Payments
Here we have the types of late payments that will have different types of impacts on your CIBIL Score and Credit Report. These late payments also affect your ability for future borrowings.
- Late Payments of 30 Days
In the case of late payments of 30 days, your credit score will be impacted, but for a shorter span of time. It is better to avoid repeating this late payment, because if it becomes a regular habit of an individual to make the payments late, there will be a huge damage to your credit score.
- Late Payments of 60 Days
If you are one among those who have made a late payment of 60 days, then your credit score will get affected to some extent. But if this late payment is done on a regular and frequent basis it will be a great damage to your credit scores.
- Late Payments of 90 Days
If you are an individual who has made a late payment of 90 days, then you be ready to hear that there is great damage caused to your credit scores. This will have a huge impact on your credit score and will last for the duration of at least 7 years in the records.
This late payment is bound to affect your credit rating and lower your credit score to a huge extent.In such a scenario, the lenders develop a belief that the borrower would be a defaulter in future.
- Late Payments of More Than 90 Days
In this case, your loan account will be considered as a bad debt and it will be tagged as “Written Off” Thus, it will become very difficult for an individual to get another loan in future if he/she has made a late payment for more than 90 days.
Ways to Remove Late Payments from CIBIL Report
1. If you have noticed that there is a late payment record that is affecting your credit score, you need to a take a copy of it.
2. After receiving the copy, you need to read it cautiously.
3. If you have made a late payment because you forgot to make the payment on time, you should ask for this information to be marked down by doing an adjustment of goodwill.
4. If you have been maintaining a proper record of paying on time from the beginning, the lender will mark down your late payment information and delete it from the records.
5. The next step is to update this information to the bureaus. After this step, you can see that there is no record of your late payment.
6. You need to continuously follow up with your lender so that the remarks of making late payments are removed from your report. Usually, it is difficult to convince the lender to remove these remarks from the report, but once the lender has agreed to it, it will take 30 days for the updating your credit report.
It should be noted that it is not an easy task to mark down your late payment because a late payment is looked at in a positive way by the lenders.
Credit scores are used in determining a borrower’s credibility. Late payments and credit behaviour are the factors that affect the credit score. However, it is not the same effect for all types of late payments. The late payment penalty that you will be charged by CIBIL depends on the duration of late payment and also the frequency of the late payment that has been made.
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