An essential parameter gauged by lenders while evaluating loan application is credit score. It's a three-digit score ranging from 300-900 which is used by lenders to gauge your creditworthiness. Note that this score can take a hit in case of delayed EMI payment for your loan.
The quantum of damage suffered by your credit score due to delayed payment primarily depends on two factors - the number of days delayed and credit history. Note that if the delay is by a day or two, it will not affect the score much.
However, if the delay is close to a month or more, then there are chances of the score taking a significant hit. A delayed EMI payment may reflect on your credit report for several years to come.Also, if your credit shows past instances of delayed payments, any further delay can further bring down your score.
To make sure you don't end up delayed EMI payments, it's ideal to automate payments. Give standing instructions to your bank wherein the desired amount is debited from your account on a set date. It's ideal to set it close to the date when salary is credited into your account.
Another way to do so is to opt for a loan with a competitive interest rate as it has a direct bearing on the rate of interest. A competitive interest rate keeps EMIs on the lower side. Also, make sure to check credit score before applying for a loan. You can check your credit score for free once in a year from the credit information companies (CICs) or third-party fintech websites.
