29-Feb-2016 written by : FSI-Team
“With great power comes great responsibility” said Ben Parker, a fictional character and the famed Uncle Ben of none other than a favourite superhero Spiderman. Uncle Ben could have well been talking about credit usage, that is relevant to all us today. If you have been bestowed with the “power” of credit, it is your responsibility to service your credit well and on time. That is the one recipe for success when it comes to increase your CIBIL score. Your CIBIL score is a three digit numeric between 300-900 that will decide your fate when you make an application for any fresh credit.
Most people do not realize that the impact of not making timely repayments on any kind of credit can be disastrous to one’s credit score. Even a single late payment can bring down your CIBIL score by a bit. So what is the way out if you have missed a payment on your loan or your credit card by a least of 30 days? Let’s find out more.
In the world that we live in today, credit and its usage is become an integral part of our lives. However, since it is so readily available, most of us do not pay enough importance to its usage. This can be detrimental to our CIBIL scores as every mistake we make may shave off a few CIBIL points. But sometimes due to unavoidable circumstances you may be delayed on a payment on your credit card or a loan. If you are late by 30 days as per your repayment schedule, here’s what you can do to salvage the situation and thereby prevent a negative impact on credit score.
If it is a genuine cause like an accident or an ailment that has put a temporary brake on your cash flows, inform your lender about it immediately and assure them that you will be able to make up for it in the next cycle. If you inform the lender as soon as you gauge the possibility of a delay, your information about the late payment may not be reported to CIBIL in the first place. It is however important to maintain utmost transparency and state a genuine cause, as anything fake can get you into serious trouble later.
As we stated earlier, sometimes it can be mere carelessness on the borrower’s part to have missed a due date for a payment. If this is the reason why you are a month late on your re-payment schedule, make sure you make the payment on your loan or your credit card immediately. In this day and age, you can make the most of technology to set up reminders across devices. There are even apps that can help you with your repayment schedule. Make sure you take advantage of such apps or set up reminders so that you never let a payment date slip by again.
If you are keen to improve your CIBIL score, make sure that you check your CIBIL report once to ensure that you have been able to compensate for the late payment.
However, do not check your CIBIL report as soon as you make the delayed payment. Give it at least a month or even two to show up on your CIBIL report. Oftentimes, a delay in about 30 days in a single payment, may not have a huge negative impact on your CIBIL score, so long as you make up for the mistake shortly after you have made the discovery. As long as you ensure that this is a one-time blip and do not make it a habit to make late payments you have little to worry about.
If you really wish to enhance your credit score, you should always make sure that you are making timely repayments on each and every credit line that you have availed of. Also, make sure that you have taken care of other factors such as keeping your credit utilization low and maintaining a healthy mix of credit.
If you already have these factors working in your favour, a 30-day late payment will not make an earth shattering difference to your CIBIL score. The thing to be mindful of is not to become a habitual late payer as it will then begin to have a lasting negative impact on your credit score, the impact of which will be harder to do away with.