Does buying an iPhone 17 on EMI impact your credit score? Here’s the truth

Are you also planning to build up towards a wonderful Diwali? To make it more special, are you planning to grab the recently launched iPhone 17 on EMI? Still, before purchasing, it's essential to understand how buying an iPhone 17 on EMI affects your credit score, borrowing capacity, along the potential financial risks associated with the same.

The impact on your credit score in such a case depends entirely on timely EMI repayments, which can strengthen your credit integrity and overall creditworthiness. Furthermore, missing or delaying iPhone 17 EMI payments can hurt your credit score; here’s how it impacts your financial profile.

How iPhone 17 EMI payments affect your credit score

• Opting for an iPhone 17 EMI adds a new credit obligation to your profile. Timely repayments help maintain or build a strong credit score, especially for new borrowers.
• Keep in mind that even missing one EMI can result in an immediate dip in your credit score. Furthermore, additional late payment fees or interest can also accumulate if the EMIs are delayed and the entire repayment plan is extended by the borrower.
• Hence, buying a new iPhone 17 on EMI does not have any direct adverse effect on your credit profile or your credit score. Still, if the planned repayment tenure is not adhered to diligently, it can have long-term serious consequences for the borrower.

Key factors to consider before buying the iPhone 17 on EMI

I. Credit utilisation ratio: A large EMI purchase, such as an iPhone 17, can sharply increase your credit utilisation ratio. This ratio in normal circumstances should always stay below 30% of available credit limits. A higher credit utilisation is a clear signal to lending institutions that a borrower is risky.

II. Efficiently plan on managing multiple EMIs: If you add your iPhone EMIs to an existing personal loan, home loan, or any other credit line, your total debt-to-income ratio increases considerably. Such a development reduces eligibility for future credit.

III. New RBI rules: The Indian regulator, i.e., the RBI, is working towards a new mechanism under its Fair Practices Code, where it aims to ensure that lenders have the power to recover small-ticket loans while also protecting customer data. The aim here, as per a Reuters report, is to lock phones whose EMIs are not paid on time.

Currently, there is no official notification on this matter; however, work is being done to find a path that balances the privacy rights of the customer with the funding rights of the lender.

Essential tips before you swipe your card for iPhone 17

1. Carefully go through your credit score before opting for such EMI schemes. Any credit score below 750 indicates that it is wise to take a break and think carefully before taking on new debt.
2. Choose no-cost EMI options where possible to avoid hidden charges, processing fees, along other similar expenses. Such an approach can also help you avoid paying excessive interest.
3. Go through the terms, conditions, and rules carefully to understand the entire repayment tenure. It is critical to ensure that all payments are made on time to safeguard your credit future.
4. If you have doubts, contact the customer service team of your credit card issuing institution and discuss the total repayment tenure, amount, possible penalties, and other relevant issues before proceeding with your purchase.

A prudent approach is vital when purchasing premium gadgets, such as the iPhone 17, on EMI. If you plan and manage the entire repayment process properly, it can also help you build your credit history and a clean credit profile.

Still, keep in mind that missing payments and not clearing out pending EMI dues on time can impact both your credit score and future access to credit. It can also have legal consequences and accumulate debt, thus making the entire practice of borrowing through your credit card more challenging. Any final decision in this regard must be taken only after proper due diligence and consultation with a certified financial advisor.

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Disclaimer: Mint has a partnership with fintech companies to offer credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article aims to educate readers and raise awareness about the essential needs for credit, including loans, credit cards, and credit scores. Mint does not promote or encourage taking credit, as it comes with risks such as high interest rates and hidden charges. We advise investors to discuss with certified experts before taking any credit.