Do UPI payments indiscriminately every day? Know what effect it is having on your Credit Score. Do you frequently make UPI payments? Find out how this is affecting your credit score.

In today’s digital era, it has become our habit to make payments through UPI everywhere, from tea stalls to big shopping malls. The use of this payment system, which provides relief from the hassle of withdrawing cash from purse or finding an ATM, is increasing at a record breaking pace in every corner of the country. But meanwhile, a big question keeps revolving in the minds of many smartphone users that whether these digital payments made several times a day are having a direct impact on their credit score (CIBIL Score)?

Real connection between UPI transaction and CIBIL score

According to credit experts, simple payments made directly through UPI linked to your savings account or current account do not have any negative or positive impact on your credit score. Credit bureau agencies like CIBIL mainly track the repayment patterns (timely payments) of loans and credit cards taken by you. Since a normal UPI payment is made from money deposited in your own bank account and not from any borrowing or credit, it does not affect your loan eligibility or score.

Your credit score may get stuck in these special circumstances

However, there is an important nuance here which every UPI user should understand. If you are making payments on your UPI app using credit services like ‘UPI on Credit Card’ or ‘Buy Now Pay Later’ (BNPL), the situation changes completely. Using such features means that you are taking a loan directly. In such a situation, if you miss paying your bill on time, your credit score can fall down very rapidly.

Keep bank statements clean in the era of local and digital banking

The use of UPI for small amounts has become very common in Tier-2, Tier-3 cities and rural areas of India. Even though these transactions of ₹5 and ₹10 may not harm the CIBIL score, it makes your bank passbook or bank statement very long and complicated. When you apply for a home loan or car loan at a local bank branch in future, the bank officer checks this long statement. Too many small transactions can make it difficult for the bank to assess your financial habits, so using UPI Lite or digital wallet for small payments is considered a wise option.