Last Updated:
A single missed payment can knock off 50 to 100 points from your credit score.
Missing a home loan EMI can lead to a drop in your credit score. (representative image)
Credit score plays an important role in determining your financial health. A low score can affect your chances of getting new credit or even reduce your credit card limit. Missing a home loan EMI can lead to a drop in your credit score, which can make it harder to borrow in the future.
A single missed payment can knock off 50 to 100 points from your credit score, which can affect your credit history. A bad credit score can severely damage your ability to take out loans in the future.
Consequences of missing a home loan EMI payment
A borrower with a credit score above 750 may experience a decrease of up to 100 points after missing just one EMI. Those who are already below 700 could see even more severe drops, which would put them at risk for future loan approvals.
You will have to pay late fees, fines, and penalty interest for every EMI payment that you miss. Typically, the penalties range from 1 to 2 percent of the outstanding amount.
How can you recover your credit score?
If you have missed a due date, then make sure you pay it off at the earliest. The longer time you take to pay off the loan, the greater the negative impact it will have on your credit score. To avoid such a situation, you can opt for an auto-debit facility. This way, EMI will be automatically deducted on the same date every month.
You can also set up calendar alerts or link your EMIs to your salary account to avoid any future misses. One of the key steps you can take is to avoid taking new loans until your pending dues are cleared.
Another option to improve your credit score quickly is to use a low-limit or secured credit card that is backed by a fixed deposit and that you pay back in full each month. This will help you restore a solid payback history without putting undue strain on your budget.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
view comments
- Location :
Delhi, India, India
- First Published:
