If you are too busy to pay your credit card bill on time, then your credit score will go down. This practice of yours will have to stop. You will have to keep track of your due dates and repay the credit amount in time.
What is a Credit Score?
Whether you miss a payment or pay it after the due date it will be recorded in your credit report. And trust us you do not want your credit score to deteriorate if you are planning to apply for a loan or credit card in future. A Credit Information Bureau of India Limited like CIBIL sets a three-digit credit rating for every individual based on his loan repaying performance. This score ranges between 300-900 and the more your score will be closer to 900 the more lucrative credit options you will be offered by the lenders.
The average credit rating in India stands at 715 during a financial year. This score helps lenders including banks, NBFCs and other financial organisations to decide whether you are a credit-worthy customer or not. These institutions generally prefer a customer with a credit score of 750 and above.
What Happens to Your Credit Score After a Late Payment?
The severity of the case depends upon how many days late your payment is. Like if your payment is:
- 30 days late, then you will be required to pay a late payment fee along with a high APR. But it will not affect your credit rating as long as you repay before 30 days. However, it will damage your score if this becomes a regular practice.
- 60 days late, then one late payment will only attract a small fine. But if it is too often then it may damage your credit score.
- 90 days late, this will be recorded in your report for seven years. Don’t make it a habit to pay this much late if you have done it once.
- More than 120 days late, “At this point, your debt is usually “charged off” or sold to a third-party collection agency. Both occurrences are reported on your credit report and hence, your credit score will reduce further,” wrote business-standard.
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What You Can Do to Repair Your Credit Score?
Analyze Your Credit Report
Start by thoroughly analyzing your credit score and find all your default entries. You will find all your late, missed, partial or timely paid payments written with these transactions. After that try to fix these issues by making timely complete payments. Because not paying dues on time too often can damage your creditworthiness for a long time.
Pay Every Bill on Time
You should pay each and every bill on time. Whether it’s your BNPL account, credit card, or any type of loan, you should pay every due on time to repair your credit score faster.
Turn on Payment Reminders
Set payment reminders on your phone for every month. Then you will pay every single EMI on time. This will improve your loan repaying capacity and creditworthiness.
Set Autopayments
If you are using a credit card or debit loan facility then you can set auto payments to repay every EMI on time. After this, you will not be required to pay the dues manually and just have to maintain the balance in your account.
