credit card emi

[underground_7]

My credit card limit is Rs 30000. And I have to buy a mobile phone on EMI of Rs 16000. How will my credit score be affected by taking a mobile phone on EMI of Rs 16000?

 

[shrimantasarkar30]

Using your credit card for an EMI purchase of ₹16,000 when your credit limit is ₹30,000 will affect your credit score in the following ways:

1. Credit Utilization Ratio

Credit utilization ratio is the percentage of your credit limit that you are using. In this case:

Credit Utilization Ratio} = {16,000 /30,000} × 100 = 53.33%

2. Timely Payments

If you pay your EMI installments on time, it will reflect positively on your credit report, as timely payments are one of the most significant factors in your credit score.

Missing any EMI payments can harm your credit score significantly.


3. Impact of EMI Structure

Since the ₹16,000 will likely be converted into monthly installments, it reduces the immediate burden of full repayment. However, the total outstanding amount is still factored into your utilization ratio until it is fully paid.


4. Long-Term Implications

Regular EMI payments will add to your credit history, demonstrating responsible credit behavior, which can improve your score over time.


Recommendations:

Monitor Utilization: Try to keep your overall utilization below 30% of your credit limit by limiting other purchases or requesting a higher limit from your credit card provider.

Pay on Time: Always pay your EMI installments on or before the due date to avoid penalties and negative impacts on your credit score.

Avoid Other Big Purchases: Until your utilization ratio reduces, avoid additional large transactions on your credit card.


By managing this EMI responsibly, the initial dip in your credit score due to high utilization can be mitigated over time through consistent, timely payments.