A sudden drop in your CIBIL score can be frustrating—especially when you haven’t taken any new loan or credit card.
But your credit score is influenced by multiple factors, and even a small mistake can lead to a sharp dip.
Understanding the real reasons behind sudden score falls can help you take quick action and protect your future loan eligibility.
Here are the top 7 reasons why your credit score may drop unexpectedly in 2025.
1. A Missed or Delayed EMI Payment
Even one missed EMI—whether by accident, bank error or insufficient balance—can reduce your credit score by 30–80 points.
Common causes include:
Salary delay
Technical glitches
Not updating EMI auto-debit
Forgetting credit card due dates
Timely payment history makes up nearly 35% of your credit score.
2. High Credit Card Utilisation (Above 30%)
If you suddenly swipe your card for large purchases or your utilisation jumps above 30% of your limit, your score drops within the next reporting cycle.
Example:
Credit limit – ₹1,00,000
Usage – ₹70,000 → Score dip expected.
Banks see high utilisation as a sign of credit dependency.
3. Multiple Hard Inquiries From Loan/EMI Applications
Every time you apply for:
Personal loan
Home loan
Credit card
BNPL/EMI schemes
…the lender makes a hard inquiry on your report.
Applying multiple times within a short span signals credit hunger and reduces your score by 5–10 points per inquiry.
4. Closing Old Credit Card Accounts
Old cards mean:
Longer credit history
Higher available limit
Better utilisation ratio
When you close an old card, your utilisation increases and your average credit age decreases—both causing a sudden score dip.
5. Increase in Outstanding Balance or Carrying Forward Dues
If you don’t clear your credit card bill fully and carry forward a balance:
Your utilisation rises
Your repayment pattern looks weak
Your score drops sharply
Revolving credit negatively affects your credit health.
6. Errors in Your Credit Report
This is more common than people realise.
Your credit bureau may record:
Wrong loan details
EMIs marked overdue by mistake
Unknown credit accounts
Incorrect personal data
A single reporting error can reduce your score significantly.
Checking your report every 3 months helps catch mistakes on time.
7. Loan Settlement Instead of Full Closure
If you “settle” a loan instead of paying it in full, the lender marks your account as:
Settled
Written-off
Partially paid
This negatively impacts your credit score for years.
Even old settlements can trigger sudden score drops during updates.
How to Recover Your Score Quickly
✔ Pay all EMIs on time
✔ Keep credit card utilisation under 30%
✔ Avoid frequent loan applications
✔ Maintain old credit accounts
✔ Review your credit report every 3–6 months
✔ Clear outstanding dues fully
✔ Fix any inaccuracies by raising a dispute
With disciplined habits, most people recover 30–60 points within 2–3 months.
FAQs
Q1. How fast can a credit score drop?
It can drop within a single reporting cycle (30 days).
Q2. Can one missed EMI reduce my score?
Yes, even a single missed payment can reduce it by 30–80 points.
Q3. Does checking my credit score reduce it?
No. Soft checks do not affect your score.
Q4. Why did my score drop even though I paid all EMIs?
Possible reasons: high credit utilisation, mistakes in your report or multiple inquiries.
Q5. How long does it take to improve a score?
2–6 months with consistent discipline.
Published on : 15th November
Published by : SMITA
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