Understanding and Resolving Issues with Closed Personal Loan Showing on CIBIL Report

Many individuals navigate through the complex world of personal loans and their impact on credit scores, often encountering unexpected issues. A common concern arises when individuals have closed and paid all personal loans from IDFC Bank and two other private finance firms, but the status on their CIBIL report remains unchanged (settled or partially settled).

Understanding the Terminology

When a loan is marked as settled, it typically means you negotiated with the lender for a lesser amount or received interest reduction, leading to an adjusted settlement. This can potentially impact your CIBIL score in the future. If a loan is marked as ‘closed on time with outstanding dues,’ this indicates that interest or principal remained due, but payment was eventually made, though potentially late. Such situations can still be flagged as settled, which can affect your credit score.

Common Situations and Their Implications

Delayed Settlement: If you settled the loan late after the due date, it is categorized as a 'settlement,' which lowers your credit score temporarily but improves with subsequent positive credit events. If the loan data has not been updated by CIBIL, the bank might not make changes immediately as reporting is done every 30-45 days. In urgent cases, the bank can request updates to at least three of the four existing credit bureaus.

Preventive Measures: To resolve this issue, you should:

Contact Your Bank Branch: Ensure that the loan account has been fully closed, even if you’ve made the final payment. Most banks keep the loan account active even after full repayment until the next quarter-end. You can contact your branch to confirm closure. Request Immediate Update: Once the account is closed, CIBIL typically updates the report by the end of the month, but it can take up to the quarter-end next month for complete updates. If your loan was closed during January, CIBIL would update the report in June after March 31 quarter-end. No Dues Letter: If you urgently need another loan and the report is not updated, obtaining a 'No Dues' letter from the bank can help.

Conclusion

If you have closed and paid all your personal loans but still see them listed on your CIBIL report as unsettled, it's critical to address this issue proactively. By contacting your bank, ensuring proper closure, and possibly obtaining a 'No Dues' letter, you can resolve this discrepancy and ensure your credit score reflects your financial health accurately.

Frequently Asked Questions (FAQs)

Q: Why is my loan still showing as unsettled if I have paid it off?
A: This could be due to delayed updates by the bank or CIBIL. Contact the bank to confirm closure and request an immediate update to your CIBIL report.

Q: How long does it take for updates to appear on my CIBIL report?
A: It can take up to 30-45 days for updates to reflect, typically every quarter end. In urgent cases, banks can request an update to multiple credit bureaus.

Q: Can I force an update on my CIBIL report?
A: You can contact your bank to request an update, but the process can vary based on your bank and the credit bureau. A 'No Dues' letter can also be helpful.