Investor query: Will a missed EMI, loan settlement, early prepayment or high card usage hurt my CIBIL score more?

Query 1: I am a 28-year-old doctor from Mumbai and plan to apply for a housing loan in the next two years. If I miss one EMI by over 30 days, is that more damaging to my CIBIL score than closing a loan as “settled”? Does prepaying a loan early reduce the benefit of repayment history? Also, if I use more than 50% of my credit card limit but pay it back before the statement date, does it still get recorded as high utilisation?

Advice by Bhavesh Jain, MD & CEO, TransUnion CIBIL

Missing an EMI by more than 30 days is recorded as a delinquency and can affect your CIBIL score. However, closing a loan as “settled” tends to have a stronger impact as it indicates that the full dues were not repaid as per agreement with the lender. Prepaying a loan ahead of schedule does not harm your CIBIL score. In fact, it demonstrates financial discipline and reduces your debt burden. The only aspect you miss out on is a longer track record of repayments, but early repayment reflects positively on your financial discipline.

On credit card utilisation, the figure that gets reported is usually the balance outstanding as on the statement date. If you pay down your card before the statement is generated, high utilisation is not recorded. However, if the statement captures a higher balance, it could reflect as high utilisation and may impact your CIBIL Score. To keep things consistent, it’s best to maintain utilisation below 30% at all times.

A CIBIL score is a three-digit number that reflects an individual’s creditworthiness. It is calculated based on the credit information contained in the CIBIL Report or Credit Information Report (CIR).

Query 2: I am a freelance consultant in Bengaluru with irregular income and want to buy a car on loan. How do lenders view fluctuating income when my CIBIL score is otherwise good? Will becoming an authorised user on my family’s old credit card improve my profile? Also, if I apply to multiple lenders for a car loan within a short period, is that counted as one inquiry or several? And overall, which matters more for my score, credit mix or repayment history?

While evaluating a loan application, lenders look at your credit profile  along with other aspects such as income stability. Even with a good CIBIL score, lenders may follow a practice of assessing additional data sources, in some cases, if an applicant holds saving account with the same lender, income patterns might be referred, particularly for auto or home loans where steady repayment is key.  Many lenders may ask for additional documentation such as past income tax returns or bank statements to better understand repayment capacity. Becoming an authorised user on a family member’s long-standing and well-maintained credit card can provide some benefit by reflecting positively on your credit profile, but the impact is usually limited compared to building your own credit history. It is always better to have primary credit lines in your own name. When you apply for the same loan product (like a car loan) with multiple lenders within a short period, those inquiries are usually grouped as one, as the system understands you are “rate shopping.”

However, spreading such applications over time may lead to multiple inquiries being recorded separately, which may affect your score. Between credit mix and repayment history, the latter carries greater weight. Timely repayments form the strongest foundation of your score, while a healthy mix of secured and unsecured credit plays a supportive role.