Loan closed but credit report says otherwise? Here’s how to fix it
Closing a loan should be the end of your worries, but when it still appears as “active” on your credit report, it can be frustrating. Your credit scores could be lowered or applications rejected—there are numerous unexpected, but serious, consequences of a delayed loan closure. Here’s how to resolve them quickly to preserve your creditworthiness.
A disappointing discrepancy Repaying a loan should be a happy occasion—but to find that the loan is still listed as current on your credit report can be infuriating and disconcerting. This discrepancy can harm your credit score and delay approval of new loans. In most instances, this kind of discrepancy results from delays in reporting on the part of lenders. It is necessary to understand how to fix this problem in order to protect your financial health.
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Why the loan is active Credit reporting bureaus like CIBIL are mandated to extract account information from the creditors within 30 to 45 days. Your report might not have been reflected with the data that it is closed yet since you recently closed a loan, and there could be pendency, system failure, or documents pending from the creditor end, all of which might get delayed in reflecting the status on your report.
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Check lender report status Your initial step should be that you yourself contact your lender and ask if they have closed the closure in the bureau. Always ensure that the lender provides you with a loan closure letter or No Objection Certificate (NOC) to look at later. These are your documents in case you are requested to follow up a dispute. If your lender has not filed, ask them to file at an early date.
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File a complaint with the credit bureau If 45 days or more have passed after you paid back the loan and the update is not seen in your report, raise a dispute with CIBIL. You can do so through their Dispute Centre website by marking the wrong entry and uploading supporting documents such as your NOC and final payment receipt showing payments. If you mail this, CIBIL will initiate verification from your lender and corrections will be made within a month.
Follow-up and monitor After lodging a complaint, keep monitoring now and then in your CIBIL account in the "Dispute History" column. If nothing happens for 30 days, contact the bureau and the lender about the issue. In pending cases, request the case to be routed to the Reserve Bank of India's ombudsman facility so that your issue gets resolved and settled.
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Why taking action is necessary Keeping closed loan as open will generate artificially high debt burden, lower credit limit availability, and low credit score. These issues may result in higher interest in the future or loan rejection. It has to be made sure that such errors are corrected at an early stage so that correct and proper credit history is created.
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Invest in your credit health An outstanding paid loan that remains active on your account can cause long-term issues with your financial arrangements. Check the closure with your lender, dispute with the bureau if necessary, and ensure to check your credit report at all times. Having these updates in your control means that your credit record is an accurate reflection of your responsibility and protects your financial prospects.