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What Is The Impact Of Late Personal Loan Payments On Your CIBIL Score?


by Mahindra Finance


May 23, 2024


5 mins read

A personal loan's late payment can have a significant impact on your creditworthiness, affecting your CIBIL score. Your credit score reflects your ability to repay loans based on your credit history, and lenders use this score to assess your creditworthiness when you apply for new loans. 

The Credit Rating and Information Bureau of India Ltd (CIBIL) monitors credit transactions of individuals and businesses, maintaining a database of credit reports and scores. 

This article will discuss the impact of late personal loan payments on your CIBIL score and provide practical tips to avoid late payments.

Consequences of late personal loan payment

Late personal loan payments can lead to several consequences that negatively affect both your credit score and financial health:

Piling up of personal loan interest and charges

When you fail to make timely loan repayments, lenders levy late payment charges or penalties. These charges can be significant, increasing the overall cost of borrowing.

Additionally, personal loan interest rate continues to accrue on the outstanding amount, adding to the financial burden. 

Adverse impact on credit score

Late payments are reported by lenders to CIBIL, impacting your credit score.

A low credit score makes it difficult to secure new loans or credit cards in the future.

It may take months or even years of responsible repayment behaviour to restore your credit score.

Limited access to credit

Personal loan late payment tarnishes your credit history and erases any previous good repayment record. This makes it challenging to obtain credit facilities from lenders, hindering your financial goals and aspirations.

Financial stress

Late personal loan payments can also lead to financial stress, as mounting personal loan interest charges and penalties create a burden on your income. This can disrupt your overall financial stability and impact your ability to meet other financial obligations.

Top 5 tips to avoid late payments

To maintain a good credit score and avoid the negative consequences of late personal loan payments like higher personal loan interest rates, follow these tips:

Tip 1. Set up auto-debit facility

Link your bank account with automatic payment facilities provided by lenders.

This ensures that the personal loan EMI amount is automatically deducted from your account on the due date, eliminating the risk of forgetting or missing payments. You can use a personal loan EMI calculator to estimate your monthly payments and plan your finances accordingly.

Make sure you have sufficient funds in your account to cover the EMIs.

Tip 2. Maintain updated contact details

Keep your contact details such as address, phone number, and email ID updated with the lender. This ensures that you receive timely personal loan EMI reminders, statements, and other important communication related to your loan.

Tip 3. Plan your finances

Create a budget and allocate a portion of your income towards loan repayments.

Prioritize loan EMIs and ensure they are paid on time. Use personal finance management tools or apps to track and manage your expenses effectively.

Tip 4. Utilise grace periods

Some lenders offer a grace period before imposing late payment charges.

Use this window to make timely personal loan EMI payments and avoid additional penalties.

Tip 5. Communicate with your lender

In case of financial difficulties or unforeseen circumstances, communicate with your lender. They may provide temporary relief or offer alternative repayment solutions to prevent personal loan EMI late payment charges.

Importance of timely repayments

Timely repayments not only protect your credit score but also showcase your financial discipline and responsibility. It demonstrates to lenders that you are a reliable borrower who can be trusted with credit facilities. This enhances your chances of securing future loans at favourable personal loan interest rates and terms.


It is not only personal loan EMI late payment charges; delayed payments on personal loan can also have severe consequences on your CIBIL score and overall financial well-being. Hence, it is essential to prioritise timely repayment to maintain a good credit score and access credit facilities in the future.

If you are facing challenges with personal loan late payments, Mahindra Finance offers potential solutions tailored to suit your needs. With a range of loan products and a customer-centric approach, Mahindra Finance understands the importance of timely repayments and the impact on your credit score.


Q1: Will a single late payment significantly impact my CIBIL score?

A: Yes, even one late payment can negatively affect your credit score. 

Q2: What are the late payment charges for personal loans?

A: Late payment charges vary across lenders, but they are generally a percentage of the overdue amount.

Q3: Can I improve my credit score after late payments?

A: Yes, you can improve your credit score over time by consistently making timely loan repayments and demonstrating responsible financial behaviour.

Q4. Can late payments be removed from the credit report?

Real late payments can't be removed, but if it is reported in error, you can dispute with the credit bureau with proof of timely payment and it may lead to deletion. 

Q5. How much can a late payment lower my credit score?

Late payments can plummet your credit score by 80 to 100 points. 

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