Loan closed but credit score not updated? Here’s what to do next | Mint

An essential milestone in your financial journey is loan closure. It decreases debt, and improves cash-flow, and suggests you have borrowed responsibly. However, if the loan still appears to be “active” on your credit report, you may find yourself frustrated and puzzled.

This is a complete, step-by-step process to help you address the issue, and ensure your credit report reflects your financial evolution in a fair manner.

Why does the delay in updating loan closures happen?

Lenders may take 30 to 60 days to report to credit bureaus that the personal loan has been closed, even if it was fully paid back. During this period:

• The loan status will appear as “active”.
• Your utilisation remains high.

Longer delays may happen if any of the below applies:

1) The lender has not updated the internal status, which has caused processing issues.

2) Batch reporting schedules were not working to bureau timelines.

3) Backlog in operating, especially during busy banking cycles.

Steps to rectify a loan closure not reflected in credit report

1. Talk to your lender

To begin the updating process:

• No due certificate or loan closure letter.
• A copy of your last statement showing a zero balance.
• The latest date when you made an EMI payment.
• Those documents are vital if you have to go the escalation route.

3. Make a dispute to the credit bureau

As soon as you have your proof:

When to escalate further?

If in the past sixty days, nothing happens:

In conclusion, a loan that has been paid in full reported as outstanding on your credit report can hurt your credit score. Don’t dismiss it. Be proactive with a lender if need be to escalate through bureaus once you have firmed up the lender.

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Disclaimer: Mint has a tie-up with fin-techs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.