CIBIL Score Alert: This One Common Credit Card Mistake Can Wipe Out Your Score

Credit cards are fast becoming a necessity in India. They offer convenience, rewards, and emergency financial support. Whether it's shopping, medical bills, travel, or dining—credit cards make transactions quick and easy. But behind the shiny offers and cashback schemes lies a dangerous financial habit that many users fall into unknowingly: paying only the “Minimum Due” amount on their credit card bill.

It seems like a harmless choice—paying a small percentage of the total bill to avoid late fees. But in reality, this habit can severely damage your CIBIL score, and in extreme cases, bring it down to zero. Yes, zero—which could mean no home loan, no car loan, no personal loan, and not even a new credit card.

This article breaks down how this one mistake can silently ruin your credit profile and what you can do to avoid it.

What Is the “Minimum Due” and Why It’s a Trap

Every month, your credit card provider sends you a statement with two key amounts:

Total Outstanding: The total amount you’ve spent and need to repay
Minimum Due: A small portion (usually 5%) of the total amount, required to avoid a late fee

Many users think that by paying the minimum due, they are fulfilling their obligations. But this is only partially true.

By paying the minimum due:

You avoid a late payment fee
But the remaining balance accrues high interest, typically 3–4% per month, or up to 48% annually
Over time, this unpaid amount keeps growing, even if you continue paying the minimum due each month

This is how a seemingly manageable bill becomes a mountain of debt, and your credit reputation takes a serious hit.

CIBIL Score 101: Why It Matters

The CIBIL score is a three-digit number ranging from 300 to 900 that reflects your creditworthiness. It is calculated by TransUnion CIBIL, one of India's major credit bureaus.

Lenders use your CIBIL score to determine:

Whether you’re eligible for a loan or credit card
How much interest to charge you
How much credit limit to approve

Score Range	Meaning	Loan Eligibility
750–900	Excellent	Very high
700–749	Good	High
650–699	Fair	Moderate
600–649	Poor	Difficult
Below 600	Very Poor	Very unlikely
Zero or NA	No/Critical Issues	Almost impossible

Having a zero or NA score means you either:

Have no recent credit activity
Have missed payments for a long time
Are considered too risky for lending

How Minimum Due Payments Destroy Your CIBIL Score

Let’s explore exactly why and how paying only the minimum due can affect your credit score:

1. Increased Credit Utilization Ratio (CUR)

The Credit Utilization Ratio is the percentage of your total credit limit that you’re using.
For example, if your credit limit is ₹1,00,000 and your outstanding balance is ₹60,000, your CUR is 60%.
Experts recommend keeping CUR below 30%.

When you only pay the minimum due, your balance doesn’t decrease significantly, and your CUR remains high. A high CUR suggests that you’re overly dependent on credit, which is a negative signal to lenders.

2. Payment History Degrades

Payment history makes up about 35% of your CIBIL score.
While minimum due payments may not be “late,” they still indicate that you are not clearing your full dues.
Over time, this behavior marks you as a "revolving credit user", which lowers your reliability in the eyes of credit bureaus.

3. Interest Accumulation Leads to a Debt Spiral

Paying only the minimum due means the remaining balance is carried forward—with high interest. This amount compounds month after month.

Eventually:

Your debt grows faster than you can repay
You may max out your credit limit
You’ll end up in a debt trap

This not only affects your credit score but also your financial freedom.

4. Late or Missed Payments in the Long Run

As the outstanding balance grows, it becomes harder to repay. Eventually, even the minimum due becomes unaffordable, and you may start missing payments. These missed or delayed payments are directly reported to CIBIL and can crash your score to zero.

How Can Your Score Drop to Zero?

Most people believe CIBIL scores only drop with major defaults or loan rejections. But even small, repeated missteps can lead to disaster.

Here’s how a score can fall to zero:

If you don’t make full payments for several months
If you only pay the minimum due and your debt piles up
If you default or delay payments consistently

CIBIL may then mark your score as Zero or NA, meaning your profile is too risky or inactive.

A zero score is a red flag that can:

Disqualify you from any future credit
Lead to credit card cancellation
Affect your ability to get a job (in some cases, employers check credit reports)
Block your chances of buying a home, car, or starting a business

What Should You Do Instead?

Now that you know the risks, here’s how to stay financially healthy:

✅ Pay Full Outstanding Every Month

Always aim to pay the total outstanding, not just the minimum due
This helps avoid interest charges and keeps your credit profile strong

✅ If You Can’t Pay Full, Pay As Much As You Can

Try to pay more than the minimum due—ideally 50–70% of your balance
This reduces interest and prevents debt accumulation

✅ Convert Large Purchases into EMIs (If Needed)

If you’re unable to repay in full, convert big purchases into EMIs at lower interest
This avoids the burden of large one-time payments

✅ Track Your Credit Utilization Ratio

Keep CUR below 30% of your total credit limit
If your limit is ₹1,00,000, don’t spend more than ₹30,000 regularly

✅ Set Payment Reminders or Use Auto-Debit

Never miss a due date—set alerts or automate your payments

✅ Review Your Credit Report Regularly

Check your free CIBIL report at least once a year
Look for errors, track your score, and take corrective actions

Real-World Example: Rohan’s Story

Rohan, a 29-year-old software engineer, used his credit card for shopping, bills, and travel. He paid only the minimum due of ₹2,000–₹3,000 every month on an average balance of ₹40,000.

Within a year:

His balance grew to ₹78,000 due to interest
His CUR exceeded 75%
He was unable to pay the dues and started missing payments

Result:

His CIBIL score dropped from 782 to 542, and eventually to NA after his card was canceled
He was denied a personal loan he urgently needed

All because he believed paying the minimum due was enough.

Tips to Build and Maintain a Strong CIBIL Score

Good Practice	Impact
Full payments on time	Improves payment history
Low CUR (under 30%)	Shows responsible credit behavior
Mix of credit (card + EMI)	Shows stability and maturity
Long credit history	Adds credibility to your score
Limit credit inquiries	Too many loan applications hurt your score

Conclusion: One Mistake You Should Avoid at All Costs

It’s easy to fall into the Minimum Due trap, especially when funds are tight. But remember—credit cards are not free money. Misusing them can destroy your credit future.

Avoiding this one mistake—relying on minimum due payments—can protect your CIBIL score, your financial credibility, and your peace of mind.

Final Word:

“Credit cards are powerful tools, but only if you use them responsibly. One wrong habit can cost you years of progress.”

Disclaimer:

This article is intended for informational purposes only. Please consult a certified financial advisor before making any major financial decisions.

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