If you miss your personal loan EMI, it directly impacts your credit score. Even a single missed payment can cause your CIBIL score to drop, potentially by 50 to 200 points or more. This makes it difficult to secure loans in the future or may result in higher interest rates. If EMIs are missed for an extended period, you may face penalties, and your loan could be classified as a Non-Performing Asset (NPA).
What Problems Arise Due to a Decreased Credit Score?
When your credit score drops, banks or financial institutions consider you a higher risk. As a result, loan applications may get rejected, or the loan amount approved may be reduced. Interest rates could increase, or collateral may be demanded. In some cases, your property could even be seized.
How to Improve Your Credit Score?
If you miss an EMI, there is no need to panic. The first step is to immediately pay the overdue EMI. Ensure regular payments going forward and be cautious when applying for new loans. Check your credit report every three months to ensure there are no errors. Create a budget for your expenses and focus on your financial health to avoid missing EMI payments in the future.
Precautions and Advice
Keep track of your EMI payment dates and immediately check notifications from your bank or NBFC. If you’re facing a financial crunch, consider discussing with the loan provider for options like rescheduling or EMI refinancing. By making timely EMI payments, you can maintain and improve your credit score, which will be beneficial for future financial transactions.
