Skip to main content

House Renting Guide: Important Things to Check Before Finalizing a Rental Home

CIBIL Score: Credit Card Users Beware One Small Mistake Can Drop Your Credit Score to Zero!

In today’s digital era, credit cards have become a part of daily life. From online shopping and travel bookings to emergency expenses—credit cards are everywhere. But one small habit—paying only the "Minimum Due"—can silently destroy your financial health.

If you believe paying just the minimum due every month keeps you safe—think again. This habit can eventually drop your CIBIL score to zero, blocking your access to any future loans or credit.


What is a CIBIL Score and Why Is It So Important?

Your CIBIL Score is a three-digit number ranging from 300 to 900, indicating your credit history and financial trustworthiness. A higher score makes it easier to get loans with lower interest rates.

CIBIL Score Range Status
750–900 Excellent
700–749 Good
650–699 Average
600–649 Poor
300–599 Very Poor

A score of 0 or NA means no credit history or extremely poor credit behaviour.


What Is Minimum Due and Why Is It So Dangerous?

Each month, your credit card bill shows:

  • Total Outstanding: The full amount you owe

  • Minimum Due: Usually 5% of the total amount or a fixed minimum

Banks allow you to pay just the Minimum Due and carry forward the remaining balance. But here’s the catch—the unpaid balance continues to accrue interest at a high rate of 3–4% per month, or 36–48% annually.

Example:

If your total credit card bill is ₹50,000 and the minimum due is ₹2,500—paying only that means you’ll be charged interest on the remaining ₹47,500. Over time, that interest balloons, and you could fall into a debt trap.


How Minimum Due Payments Damage Your Credit Score

1. Increase in Credit Utilization Ratio (CUR)

  • CUR = (Total Credit Used / Credit Limit) × 100

  • Ideal CUR should be below 30%

If you keep paying only the minimum due, your unpaid balance grows, which increases your CUR. High CUR is a major negative signal to credit bureaus, as it accounts for 30% of your CIBIL score.

2. Negative Impact on Payment History

  • Payment history contributes 35% to your credit score

  • Regularly avoiding full payments categorizes you as a "Revolving Credit User", a red flag for lenders

3. Potential Impact Even with EMI Conversions

  • Converting dues into EMIs may look attractive, but if you miss payments, it still hurts your score

4. Debt Trap Risk

  • With interest piling up every month, your dues may become unmanageable

  • If your credit limit gets maxed out, it signals poor credit management and harms your score further


Can Your CIBIL Score Really Become Zero?

Yes. If you repeatedly pay only the minimum due and fail to clear the full outstanding balance, your credit history deteriorates.

If you don’t pay your dues correctly for six months or more, your score can fall to Zero or NA, indicating severe credit misuse or inactivity. This can:

  • Disqualify you from new loans or credit cards

  • Lead to account closures

  • Make future borrowing nearly impossible


So What Should You Do?

Always Pay the Full Outstanding Amount

  • Avoids interest charges

  • Maintains a good CUR

  • Shows you’re financially disciplined

If Not Full, Pay More Than Minimum Due

  • Pay at least 50-70% of the bill to keep dues under control

Keep CUR Below 30%

  • Spend only within safe limits. For example, if your credit limit is ₹1 lakh, keep monthly usage below ₹30,000

Enable Auto-Debit for On-Time Payments

  • Avoids accidental payment delays

Set Monthly Reminders for Due Dates

  • A simple habit that keeps your score healthy

Use EMI Options Smartly

  • Only when necessary, and make sure to pay EMIs on time

Avoid Unnecessary Expenses

  • Credit card is not “free money”—spend responsibly


What’s the One Mistake That Can Ruin Everything?

Regularly paying only the “Minimum Due” while ignoring the total bill—this one habit can eventually drag your CIBIL score down to zero.


Bonus: How to Improve Your CIBIL Score if It’s Already Low

If your credit score is already damaged, here’s what you can do:

Action Benefit
Clear old outstanding balances Starts improving your history
Avoid taking new loans/credit Allows your score to stabilize
Use your credit card carefully Keeps CUR in check
Always pay on time Builds a strong payment history
Monitor your credit report Fix errors, track improvement

You can check your free credit report every 3 months via the CIBIL official website.


Conclusion: Be a Smart User, Not a Careless Spender

Credit cards are powerful financial tools, but only when used wisely. Misusing them by sticking to Minimum Due Payments can lead to financial disaster.

If you’re relying on the “minimum due” to get through each month, you’re not managing money—you’re inviting trouble.

Remember:

“A credit card is your friend only when you treat it with responsibility. Otherwise, it becomes your biggest financial enemy.”


Disclaimer:

This article is for informational purposes only. Please consult a qualified financial advisor before making any investment or borrowing decisions.


Key Takeaways:

  • Paying only the minimum due creates a false sense of safety

  • Over time, interest piles up, and your credit burden increases

  • High credit utilization and poor payment history lower your CIBIL score

  • Eventually, your score could drop to zero, blocking all future credit options

  • Solution: Pay your bills on time and in full whenever possible

Comments

Popular posts from this blog

How Many Floors Can Be Built on a Plot? A Complete Guide for Builders and Investors

When planning to build an apartment or a multi-story building, one of the most critical questions is: How many floors can legally be built on the land? The answer depends on various factors such as government regulations, zoning laws, soil strength, and building codes. Understanding these factors is essential to avoid legal issues and ensure safe construction. In this article, we will discuss the key factors that determine the number of floors you can build and provide real-world examples for better understanding. 1. Understanding FSI (Floor Space Index) / FAR (Floor Area Ratio) The Floor Space Index (FSI) or Floor Area Ratio (FAR) is the most crucial factor in determining the maximum number of floors that can be built on a plot. Formula for FSI: FSI = Total Built-up Area / Total Land Area Example: Suppose you own a 1,000 sq. meter plot, and the local FSI is 2.0 . This means you can construct a total built-up area of 2,000 sq. meters . You can distribute this area in differ...

Muneeb Shafi: The Young Author Making Waves in Literature

Muneeb Shafi, a rising literary talent from South Kashmir's Shopian district, is making headlines for his remarkable achievements at a remarkably young age. Despite being an undergraduate student at Guru Kashi University in Talwandi, Punjab, Muneeb has penned numerous books, novels, articles, and pamphlets, showcasing a rare literary prowess. Not confined to writing alone, he is also a proficient calligrapher, adding another dimension to his artistic abilities. The young author's contributions to the literature field have been substantial and noteworthy. His notable work includes a book titled 'Journey from 10 to Nineteen,' focusing on the complexities of adolescence. This book has garnered attention and acclaim, propelling Muneeb Shafi, also known as 'Munna Michael,' into the limelight. Born on July 15, 2004, in Shopian, Muneeb Shafi, at just 18 years old in 2022, displays a maturity and talent beyond his years. Standing at 162cm with a weight of 60kg, he prese...

Supreme Court's Landmark Decision: Can a Tenant Become the Owner After 20 Years? Here's the Full Truth

Today, many people are earning extra income by renting out their properties. For some, it’s a side business; for others, a full-fledged investment strategy. But the real question is—how secure is your property when it’s rented out for a long period? A commonly asked question is: If a tenant lives in a rented house for 20 years, can they claim ownership of that property? The Supreme Court of India has now provided a clear and final answer to this question. This ruling is extremely important for both landlords and tenants. What is 'Adverse Possession'? In Indian property law, there is a concept called Adverse Possession . This rule is part of the Transfer of Property Act and the Limitation Act of 1963. According to this rule, if a person stays in continuous and uninterrupted possession of a property for 12 years (in the case of private property) or 30 years (in the case of government property), and the actual owner does not challenge it legally, the person can claim ownershi...