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Why your credit score can drop despite paying every EMI on time
Mint 1 hr ago·17 Sept 2026, 12:35 pm
Your credit score is a key metric for lenders, but it is not just about whether you pay your EMIs on time. A score can drop due to high credit utilisation, which happens when you use a large portion of your available credit limit. Frequent loan inquiries, such as when you apply for multiple cards or loans, can also signal financial stress. Additionally, closing old credit cards can reduce your total credit history length, which may negatively impact your score. Reporting errors from credit bureaus are another common cause of unexpected drops.
For investors, this news highlights the importance of financial literacy and the need to monitor credit health regularly. The upcoming RBI rule change, which requires fortnightly credit reporting starting in January 2025, means score updates will happen more frequently. This could make it harder to hide negative changes, so staying on top of your credit report is essential. Watch for updates on how this new reporting frequency might affect credit scores and lending decisions in the coming months.
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