Many borrowers view one missed EMI payment as a minor slip-up, but lenders and credit bureaus see it differently. Repayment history is one of the most important factors influencing your credit score, and even a single missed EMI can have a negative effect on your credit score.
A strong repayment record plays a significant role in loan approvals, credit limits, and even the interest rates offered by lenders. This is why missed payments are closely monitored.
Lenders report payment behaviour to credit bureaus through DPD (Days Past Due) data.
If an EMI remains overdue and is reported, it becomes part of the borrower’s credit history and may remain visible to future lenders for years. The longer the delay continues, the greater the impact on creditworthiness.
How much can a credit score fall after one missed EMI?
The impact of a missed EMI depends on several factors, including the borrower’s credit score, repayment history, loan type, and overall credit profile. Even a single missed EMI can lead to a drop of 50–100 points in the credit score. In India, four Credit Information Companies (CICs) authorised by the RBI generate and assign credit ratings. These four bureaus are CRIF High Mark, Experian, Equifax, and TransUnion CIBIL.
“For example, a borrower with a credit score of 780 and a strong repayment history may see a significant decline if a missed EMI is reported to the credit bureau. In such cases, the score could fall to around 680–730, depending on the overall credit profile. While the exact reduction varies, a drop of this magnitude can move a borrower from a preferred borrower category to a higher-risk segment in the eyes of lenders,” said Adhil Shetty, CEO, BankBazaar.
The impact is usually most severe when the missed payment is recent, while older delinquencies tend to carry less weight over time.
How long does a missed EMI remain visible on a credit report?
A missed EMI can remain on your credit report for up to seven years from the date of delinquency. Even if the overdue amount is cleared later, the record of the payment does not disappear immediately, says Adhil Shetty.
However, lenders are focused more on recent repayment behaviour. If the borrower continues to make timely payments after the missed EMI, the negative impact on the credit score will gradually reduce over time. In many cases, consistent and timely repayment, responsible credit usage, and a stable profile can help borrowers rebuild their credit profile in 12 to 24 months.
What happens if a borrower misses an EMI on a newly sanctioned loan versus an older loan?
“Missing an EMI on a newly sanctioned loan is generally more damaging than a delayed payment on an older loan. Since the lender has limited information about the borrower’s repayment behaviour, an early default may raise concerns about repayment discipline and financial stability,” stated Adhil Shetty.
In contrast, borrowers with an established track record of timely repayments may find that lenders view a missed EMI as a temporary cash-flow issue rather than a sign of persistent repayment stress. A strong repayment history can help offset the impact of an isolated delay.
However, regardless of the age of the loan, repeated payment delays should be avoided.
Consistent repayment discipline remains critical, as a pattern of missed payments can have a significant long-term impact on creditworthiness.
What should a borrower do immediately after realizing they have missed an EMI?
The first step is to clear the overdue amount as soon as possible. The longer an EMI remains unpaid, the greater the impact on the credit score, along with the possibility of additional penalties and charges.
“Borrowers should also identify the reason behind the missed payment, whether it was due to insufficient account balance, a failed auto-debit, or another issue. It is advisable to contact the lender and explain the situation. In some cases, lenders may consider waiving late charges if it is a genuine first-time lapse,” said Adhil Shetty.
Going forward, borrowers should ensure there are sufficient funds available for auto-debit payments and regularly monitor account activity. They should also verify that their credit report accurately reflects the updated payment status.
Acting quickly can limit the damage and prevent the account from slipping into a more serious stage of delinquency.
Is it better to borrow from savings, use an emergency fund, or take a short-term loan to avoid missing an EMI?
In most cases, it is advisable to use savings or an emergency fund rather than miss an EMI. An emergency fund is specifically meant to help manage unexpected financial needs without affecting long-term financial stability.
If savings are insufficient, borrowers should carefully evaluate all available options before taking a short-term loan. Taking on new debt to repay existing obligations can sometimes create additional financial stress if the repayment plan is not sustainable over the long term.
“A practical approach is to assess whether using a portion of savings would still leave enough for essential expenses. If the cash-flow issue is temporary, an emergency fund may be the most suitable solution. Borrowers can also explore restructuring or repayment assistance options offered by their lender. A short-term loan should be considered only when the repayment capacity is clear and sustainable,” recommended Adhil Shetty.
In many cases, a temporary reduction in savings may be less damaging than the long-term consequences of a weakened credit profile.
What repayment habits help rebuild a damaged credit score the fastest?
Credit repair takes time, but disciplined repayment behaviour can significantly accelerate recovery. Borrowers should focus on paying all EMIs and credit card bills on or before the due date.
Setting up auto-debit mandates and payment reminders can help reduce the risk of missed payments. Keeping credit card utilisation low, ideally below 30% of the available limit, is equally important.
Borrowers should also avoid submitting multiple loan or credit card applications within a short period, as this can signal credit hunger to lenders. Regularly reviewing credit reports for errors and getting inaccuracies corrected promptly can further support recovery. Maintaining older credit accounts can also help preserve the length of credit history.
Over time, these habits contribute to rebuilding creditworthiness. With consistent repayment behaviour over 12–24 months, lenders gradually regain confidence in the borrower, and credit scores typically begin to recover as well.
Disclaimer: This article is intended for informational and educational purposes only and should not be construed as financial, credit, legal, or investment advice. The impact of a missed EMI on a credit score may vary depending on an individual’s credit profile, repayment history, lender reporting practices, and the policies of credit bureaus. Readers should consult their lender, credit bureau, or a qualified financial advisor for guidance specific to their circumstances.
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