Tough economic conditions result in borrowers defaulting on home loans. If you are one of these unfortunate people to default due to some unavoidable situations you probably are aware that these actions will have serious repercussions on your Cibil credit score and your ability to take loans in future.
The thumb rule for a good Cibil score is to never make your payments late. You wouldn’t like it, people who lent you hate it and your future lenders will frown at it. Furthermore, there are various negative impacts for late payments on home loans.
Following are the few negative impacts:
1) Peace of mind: Delay in home loan repayments will weigh down heavily on us because of our consciousness. This could lead to a whole host of health problems. So make your payments on time to have peace of mind.
2) Late fee: You will be charged a late fee and it will be a ridiculous amount. If you miss your next payment, you will be charged again and will keep adding to the total amount that you need to pay your lender.
3) Will not make you “loan attractive”: Lenders hate to see late payments on your credit report. Who wouldn’t? If you have a history of late payment, lenders will find you a high-risk customer. Hence all the loans offered to you would be at higher rate. It is important to understand that India is moving towards risk-based lending. In simple words, it means that higher your Cibil score lower your interest rates will be.
4) Will show up on your credit score: Every lender updates credit information of every customer with Cibil. A late payment will reflect in your credit history for years. To ensure that late payment doesn’t show in credit score, make your payments on time.
5) Impact credit score: Eventually, every recorded late payment will pull down your credit score and make you less attractive for loans.