The Paytm Post Paid is similar to the Credit Card. Thus, people also want to know that whether default in the Paytm Postpaid would affect their credit score? As a default in the credit card payment reduces your credit score. Would the same thing happen if you default on the payment of Paytm PostPaid?
The Paytm Postpaid is a unique service from the Paytm. This service gives you some amount to spend through the Paytm. You can pay back this amount one the bill is generated. This is similar to the credit card, but you have to spend only on the Paytm and Credit limit is also low. The Paytm Postpaid initially gives the credit limit of only ₹500. All other terms and conditions are similar to the Credit card. The Paytm is giving this service in collaboration with ICICI Bank. The credit facility is given by the bank.
- Credit Limit Is fixed on the basis of Payment History
- Initially, most of the people get a credit limit of ₹500
- ICICI Bank gives the credit facility, Paytm acts as a facilitator
- You have to spend the amount on Paytm
There are some agencies which keep a track on your creditworthiness. These agencies give a score on the basis of your loan payment history. If you pay all of your credit card bills and EMI on time, the credit score would be high. But if you default on payments, the credit score would come down. Further, the banks check your credit score before giving a new loan or credit card. If the credit score is not good, the bank would sanction less loan or they can ask some mortgage. Even, banks can refuse the home loan or personal loan if the credit score is quite low.
Effect of Paytm Default on Credit Score
The Paytm postpaid is a very easy way to get a short term loan for the purchases. But, there is a chance of default. Often people forget to pay this small bill amount. If it happens there would be a heavy penalty and high interest. Nevertheless, people are more concerned about the credit score. As this can hamper the loan taking capability.
It is true that the default in Paytm Postpaid payment would affect your credit score. If you do not pay the billed amount, the ICICI Bank would report your PAN to the Credit Rating Agencies (CIBIL, Equifax, Experian). The agencies would decrease your credit score on the basis of this reporting. The credit score would not improve immediately what if you have paid all the outstanding amount.
Disadvantages of Paytm Postpaid Default
- Reduction in Credit Score
- Late Payment Penalty
- Charging High-Interest Rate from the Day of Expense
Therefore, Be careful before opting for the Paytm Postpaid. If you have a tendency of forgetting the bill payment, avoid Paytm Postpaid or any other credit card. You might know that credit cards charge high interest once you default on the payment.