One missed payment (EMI) in CIBIL can tank your CIBIL Score

As soon as you miss an EMI, the bank reports it to CIBIL. In the account section, it shows as overdue. Now see, here it is showing a higher amount, but it does not always show this much amount because in this case, many EMIs have already been missed from where we have taken the screenshot. But suppose someone has an EMI of 10,000 and they miss it in the first month, then it shows more than 10,000. Why it shows more, I will explain further, and along with that, it also shows DPD. I will also explain how DPD is shown.

Immediate Score Drop

Now many lenders and credit card issuers impose late fees when you miss your obligation even for one month. If you fail even for one month, they charge a late fine. If the payment bounces in the bank, then bounce charges are also added. Along with that, interest is also added. All of this accumulates and is shown as overdue in your CIBIL report.

Now, at this time, things have become even more problematic. If you watch my video from a few years ago, I had explained that if someone missed an EMI but made the payment in the same month, then it could still show as a standard payment in the CIBIL report. What used to happen earlier—suppose someone’s EMI date was the 5th of the month. Banks used to report to CIBIL at the end of the month, like on the 30th or 31st. But if the customer’s payment bounced on the 5th and then they paid on the 20th, meaning they paid before the reporting date, then it used to show as a standard payment.

But now the situation has changed.

RBI New Guideline (End of 2024)

At the end of 2024, RBI introduced a new guideline. All banks and NBFCs that provide loans must report to credit bureaus twice a month, meaning every 15 days. So now what is happening—if someone makes even a one-day late payment, meaning they miss the EMI and then pay the next day, many banks are still showing it as a one-day late payment. As soon as a late payment is shown, the CIBIL score also drops.

Now when the payment is not made, it shows DPD (Days Past Due) in the history. Here you can see SMA being shown—SMA 0, SMA 1, SMA 2, and so on. It is shown based on how many months the payment has been delayed. This is mostly seen in PSU banks. But in private banks, the exact number of days of delay is mentioned in DPD.

Delay Payment Reporting

Now its impact becomes very high because in the CIBIL algorithm, 35% weightage is given to credit history. So as soon as someone makes a late payment, the CIBIL score drops. Now how many points it will drop has no fixed answer because the algorithm is not disclosed.

In my experience, if someone has a good score and is making timely payments but misses even a single EMI, then their score can drop significantly. And those who already have a low score do not see that much impact. The score can drop by 10 points, 20 points, or even 30+ points.

Will you get a loan after a late payment?

If you have made only a 1-month late payment, then generally there is not much difficulty in getting a loan. But if your recent dues are not cleared, then you will not get a loan. If the issue is 5–6 months old, then you may still get a loan.

Future Credit Issues

If the DPD is high, then the problem increases. With DPD less than 90 days, some banks still provide loans, but if it is more than 90 days, then getting a loan becomes difficult. If there was an old default but after that you have made timely payments, then there are still chances of getting a loan again. But if you had defaulted on a loan and later closed it, then good banks do not easily give loans. Normally, they do not provide it. Yes, you can try with a non-banking finance company, where you may get a loan, but they charge a higher rate of interest. Also, the terms and conditions are a bit uncomfortable. Penal charges, bounce charges, and all other charges are high, and even the processing fee is quite high.

How long does a late payment affect your CIBIL score?

Even a single late payment has a negative impact. The score drops. The more you delay, the worse the score becomes. But according to CIBIL, as per their algorithm, any late payment within the last 36 months will impact your score. However, any late payment older than that does not affect the CIBIL score. Now this also depends on a case-to-case basis. Suppose someone does not have any recent loan where good payment behavior is shown, then the old DPD can still impact their CIBIL score. Similarly, if you have taken a loan and are gradually making payments, and there was a late payment 36 months ago, then it gets removed from the CIBIL report. If you continue repayment regularly. But if you made a late payment and then closed the loan immediately, then that late payment still shows in the CIBIL report.

What to do if you missed a payment?

Obviously, if you have missed a payment, then you must clear the dues as soon as possible. Otherwise, your late payment will keep increasing and your CIBIL score will drop further. So clear the payment as soon as possible so that your score remains stable. After a late payment, if you keep making timely payments, your score gradually improves. See, the score falls quickly but does not rise quickly. It improves slowly over time. So keep making timely payments, your score will return to its previous level. It may take some time, but it will recover, and you will be able to get loans in the future as well.