Are you wondering whether a failed credit card payment can pull down your credit score? If
so, the answer is ‘yes’. No matter whether you fail by mistake, intentionally, or due to
financial shortage, it will not only affect your CIBIL score adversely but your future
creditworthiness as well.
Can a failed credit card pull down your credit score?
Yes, paying your credit card payment after its due date can negatively impact your credit
score. Although a single late payment will not have a very large effect, the score would drop
significantly if you continue paying beyond due dates. This will make it challenging for you to
access credit in the future.
Key factors that impact your credit score
Following are the key factors that influence your credit score:
● History of credit repayment
Your credit history proves how reliable you are in making payments on time. Paying your
credit card instalments timely boosts your CIBIL score.
● Credit utilisation ratio
It states the total credit limit you are worthy of and how much you have utilised out of it.
This means how much you have to repay. The less you use, the better your credit score will
be. On the contrary, if your credit utilisation ratio becomes high, that will seriously impact
your CIBIL score.
● Credit mix
An ideal credit mix should contain a minimum of one secured loan account with a long-term
debt period, for example, a home loan. However, having several unsecured loans with no
secured loan may affect your CIBIL score adversely.
● Credit age
Credit age means the date from which you get the approval of your first credit. Remember,
older credit age is better for boosting your score. For instance, with a loan account ageing
2-3 years old, you can avail credit from established lenders over those new in the credit
● Frequent opening of new loan accounts
Frequent opening of new loan accounts exhibits that your current credit accounts are
insufficient to meet your financial need. This eventually increases the possibility of a higher
credit burden on you in future. Doing so may pull down your CIBIL score.
Importance of CIBIL score
Here is the importance of a CIBIL score:
● Increase in credit limit
Lending institutions increase your credit limit by seeing your consistent credit repayment
history. This impacts positively on your CIBIL score.
● Faster loan or credit card approval
An impressive CIBIL score helps you get faster approval of loans and credit cards.
● Easy payment terms
A higher CIBIL score makes you a valuable borrower to lending companies that helps you get
easy payment terms.
● Lower rate of interest
Lenders evaluate the risk profile of credit applicants before deciding the interest rate they
have to pay. Consequently, applicants with a high credit score in the Experian credit report
can get lower interest rates than those with low credit scores. A lower interest rate means
low EMI and low pressure on your finance.
● Loan with a long-term
You can fetch a loan with an extended repayment period with a steady CIBIL score. This
reduces your monthly EMI payments and decreases your repayment load.
After increasing your CIBIL score, you can visit an online marketplace, where you can check
the eligibility criteria of loans set by various financial institutions, compare their offerings,
and select one that best matches your needs.
Before applying for a loan or credit card, make sure that you maintain a good CIBIL score.
This is because it is the most important thing that lenders will consider before lending you
credit. Hence retaining a proper CIBIL score is ideal for getting quick loan approval.