Personal loans are popular for those needing funds for various purposes. These include medical emergencies, home renovations, or educational expenses. One online financial marketplace offering personal loans is Bajaj Markets. It provides attractive interest rates and flexible tenors. 

However, it is crucial to understand the impact of late payments on your CIBIL score, especially when you take personal loans.

Understanding CIBIL Score

Your CIBIL score is a three-digit number that represents your creditworthiness. This score ranges from 300 to 900. A higher score indicates good credit health. Banks and NBFCs consider this score before approving any credit application. A score above 750 is often seen as favourable. Late payments on personal loans can significantly affect this score.

How Late Payments Affect Your CIBIL Score

Late payments are a red flag for lenders and suggest poor financial management. They get reported to credit bureaus, including CIBIL, lowering your score. Frequent late payments and delays on larger loans have a more significant impact. Longer delays also worsen your score, highlighting the importance of timely payments. Here’s how this affects your score:

Immediate Impact

Even a single missed payment can lower your CIBIL score. The more recent the missed payment, the higher the impact on your score.

Frequency of Late Payments

If late payments are frequent, the impact is severe. Repeatedly missing payments suggests a pattern of financial mismanagement.

Loan Type and Amount

Larger loans have a higher impact on your credit score. Missing payments on a large personal loan will lower your score more than on a smaller loan.

Duration of Delay

The longer you delay the payment, the worse the impact on your score. For instance, a 30-day delay has less impact compared to a 90-day delay.

Consequences of a Low CIBIL Score

A low CIBIL score has several adverse effects:

Loan Rejection

Banks and NBFCs may reject your loan applications. A low score indicates a higher risk, and lenders might not want to take it.

Higher Interest Rates

If your loan application is approved despite a low score, you may have to pay higher interest rates. Lenders charge more to compensate for the risk.

Lower Credit Limits

You may also get approved for lower loan amounts. Lenders will be cautious and may not offer you the full amount you need.

Impact on Other Loans

Late payments on personal loans can also affect your eligibility for other types of loans, like home loans or car loans.

Tips to Avoid Late Payments

To maintain a good CIBIL score, timely payments are crucial. Here are some tips to avoid late payments on personal loans:

Set Reminders

Use digital tools to set payment reminders. This ensures you do not miss the due dates.

Auto-debit Facility

Opt for the auto-debit facility where the EMI gets deducted directly from your bank account on the due date.

Budgeting

Plan your finances and budget your expenses. Ensure you have enough funds to cover your EMIs each month.

Emergency Fund

Keep an emergency fund to cover unexpected expenses. This ensures that your loan payments are not affected.

Role of Bajaj Markets in Managing Personal Loans

Bajaj Markets offers several features to help you manage your personal loans efficiently:

Flexible Tenors

You can choose a repayment tenor that suits your financial situation. Longer tenors mean smaller EMIs, which are easier to manage.

Easy Access

With Bajaj Markets, you can check your loan details online at any time. This transparency helps you keep track of your payments.

Customer Support

Avail the benefits of prompt customer support. If you face any issues with your loan payments, you can reach out for assistance.

Prepayment Options

Bajaj Markets allows prepayment of loans. If you have extra funds, you can make part-prepayments to reduce your loan burden.

Recovering from Late Payments

If you have already missed payments, here are steps to recover:

Make Payments Promptly

Clear the overdue amount as soon as possible. The longer the delay, the more severe the impact.

Communicate with Lenders

If you are unable to make payments, communicate with your lender. They may offer solutions like restructuring the loan.

Regular Payments

Ensure that all future payments are made on time. Consistency in timely payments will gradually improve your CIBIL score.

Check Credit Report

Regularly check your credit report to ensure all payments are accurately reported. Dispute any discrepancies immediately.

Conclusion

Late payments on personal loans can significantly impact your CIBIL score. It is essential to understand this impact and take steps to avoid late payments. Personal loans on Bajaj Markets come with flexibility and support, which help you manage your loans better. Timely payments and tools from Bajaj Markets help maintain a healthy CIBIL score and ensure financial stability.