Festive offers are already landing. Zero-interest EMIs on phones, pre-approved limit increases, instant loans cleared in minutes.
Most of it is genuinely useful. But several of these offers carry costs that do not appear on the price tag and only surface on your credit report months later, usually in January, when the bills arrive together.
Five traps worth knowing before you shop.
This is the one almost nobody checks, and it damages your score without you missing a single payment.
When you take a no-cost EMI on a credit card, the full purchase value is blocked against your limit for the whole tenure. Buy a ₹60,000 phone on a ₹1 lakh card and ₹60,000 of that limit stays locked for nine months, even though you are repaying in instalments.
Credit utilisation, the share of your limit you are using, is one of the largest single inputs into how bureaus calculate your score, commonly put at around 30%. Sitting at 60% utilisation for nine months pulls your score down for all nine of them.
"You can pay every instalment perfectly and still watch your score fall," said Utkrishta Kumar, founder and chief executive of Oolka. "People assume a score only drops when you miss something. Utilisation does it quietly, in the background, while you are doing everything right."
What to do: spread festive purchases across more than one card, or ask your issuer for a limit increase before you buy rather than after.
The interest on a no-cost EMI has not been waived. It has been repackaged.
Three costs typically survive. GST at 18% on the interest component, which the retailer's discount does not cover and which you pay. A processing fee of 1% to 3%, plus GST on that fee, charged at the bank's discretion. And the discount you gave up, because the interest is usually funded by the cash discount or cashback you would otherwise have received.
On a ₹30,000 phone with roughly ₹4,500 of embedded interest, the GST alone adds about ₹810. With a processing fee, that ₹30,000 purchase lands closer to ₹30,810 at minimum.
What to do: ask for the upfront-payment price and the EMI price separately. Where a cash discount exists, paying upfront is usually cheaper.
Festive EMIs get taken one at a time, a few weeks apart, each one affordable on its own. They do not arrive that way. They land together, in the same month, on top of school fees and the wedding season.
This is the mechanism behind the January pattern. Card spending drops sharply after the festive months, delinquencies rise, and lenders visibly tighten. In one recent festive cycle, RBI data reported at the time showed banks cutting new card issuance from roughly 920,000 in a month to 620,000 as delinquencies climbed.
What to do: before adding a second or third EMI, total every instalment that will hit in January and check it against one month's income. If the combined figure is above 40% of what you take home, stop there.
This one catches people who did everything right.
Paying off a loan does not automatically update your credit report. Your lender has to report the closure to the bureaus, and industry guidance puts that reporting lag at up to 45 days. It sometimes does not happen at all, because of an incomplete closure file, a mismatched PAN or loan account number, or an error at the bureau's end.
The account then sits on your report as live and outstanding. It counts against you on every application you make, and nothing about your own behaviour will fix it, because the problem is a record, not a repayment.
The route out is a No Objection Certificate. You need the closure letter, the NOC, the final payment receipt and the loan agreement, submitted to the bureau with a dispute, which typically resolves in 30 to 45 days.
"We see accounts that were cleared years ago still sitting open on people's reports," Kumar said. "One of our users had his whole file held down by five rupees outstanding on a single account. He had checked his score many times. Nobody had ever read the report to him."
What to do: collect the NOC at closure, not later. If an account still shows as active 45 days on, raise a dispute with the bureau. This is one of the things an AI credit assistant can do on your behalf: request the NOC from the lender, file the dispute and follow it to closure.
All four credit bureaus in India retain default records for seven years from the date of first delinquency. That period is set under the Credit Information Companies (Regulation) Act and is not negotiable with your lender.
A single missed instalment in January 2027 remains visible on your file into 2033. Missed payment history is the single largest factor in your score.
What to do: if you are going to fall short, contact the lender before the due date. A restructured or deferred instalment is reported very differently from a missed one.
Check your credit report first, not after. It is free, it takes a few minutes, and it tells you your current utilisation, which accounts are still showing as open, and whether anything is sitting on your file that should not be.
More than 14,000 people see their credit score rise in a typical week once the errors on their report are actually found and fixed. Most of those corrections were available to them the whole time. Nobody had gone looking.
You can check your credit score free before the offers start.
Does a no-cost EMI hurt my credit score?
Not directly, but it blocks your credit limit for the full tenure, which raises your utilisation ratio. Since utilisation is around a third of your score, a large no-cost EMI can lower your score for months even if every payment is on time.
Is no-cost EMI actually free?
No. You typically pay 18% GST on the interest component, a processing fee of 1% to 3% plus GST on it, and you forgo any cash discount that would have applied on upfront payment.
My loan is closed but still shows on my credit report. What do I do?
Get the No Objection Certificate from your lender, then file a dispute with the bureau with the NOC, closure letter and final payment receipt. Lenders can take up to 45 days to report a closure, and sometimes never do.
How long does one missed EMI stay on my credit report in India?
Seven years from the date of first delinquency, across all four bureaus, under the Credit Information Companies (Regulation) Act.
How much of my income should go to EMIs?
As a working rule, keep all instalments combined under 40% of monthly take-home pay. Total what will land in January before adding a new one.
Oolka is an AI credit platform used by more than one crore Indians. It reads your credit report, finds the errors and accounts lowering your score, files disputes with the bureau, drafts closure, NOC and settlement requests to lenders, and tracks each case to resolution. It works in over 100 Indian languages and is rated 4.8 on the Google Play Store. Available to Indian citizens with a valid PAN. More at oolka.in
Issued as a consumer advisory. Figures may be verified with the company directly.
Disclaimer: This article is published in association with Oolka and not created by TNM Editorial.