Did You Just Close A Loan? Here Is Why Your Credit Score Might Still Be The Same

Closing a loan feels great, doesn’t it? Less debt, more breathing room in your budget, and that quiet pride of handling your finances well. But then you check your credit report—and the loan still shows as “active.” Wait, what? You’ve done your part, but your report hasn’t caught up. It’s frustrating, especially when it could keep your credit utilisation high and drag down your score. You’re not alone—this happens more often than you’d think. The good news? It’s fixable. And no, you don’t have to be a finance expert to get it sorted. This guide is here to walk you through it—why the delay happens, what you can do today, and how to make sure your credit report reflects the truth. So if your loan’s paid off but your report missed the memo, don’t stress. Let’s take it step by step and get your credit profile back on track. Sound good? Let’s go.

Why Loan Status Still Shows Active?

Paid off a loan but it’s still showing as “active” on your credit report?
Yeah, that can be confusing—and even a little frustrating.

Here’s what’s going on: Even after you close a loan, it can take 30 to 60 days for your lender to report the update to the credit bureaus. During that time, your credit report might still list the loan as open. That means your credit utilisation could look higher than it actually is, which might slightly impact your credit score.

So why the delay?
A few common reasons:

• Your lender might still be updating their internal systems.
• Some banks report in batches, and your update might be sitting in a queue.
• There could be a backlog—especially around peak periods like financial year-end.

In short, your report might not reflect your actual financial standing right away—but it will catch up.

Quick Tip: If you’re applying for a mortgage, car loan, or anything else soon and need your credit report to show the correct info, try reaching out to your lender. Some will manually update the bureaus on request.

Waiting isn’t fun, but rest assured: if the loan is paid off, you’re on the right track—even if the report takes a little time to show it.

Steps to Fix the Loan Status on Report

How to Get Your Closed Loan Updated on Your Credit Report

• Contact Your Lender: Reach out to the loan desk or your relationship manager—phone or email works fine.
• Request Confirmation: Ask for written confirmation that your loan has been fully closed and settled.
• Use Clear Language: Keep it short and direct. Mention you’re requesting a “loan closure update” for the credit bureau.
• Ask About Reporting Timeline: Find out when they plan to report the update to the credit bureaus—most do it in their next monthly cycle.
• Follow Up if Needed: If you don’t see an update after a few weeks, check back in with the lender.
• Be Specific and Proactive: Banks often respond faster to clear, specific requests. Don’t wait for the system—take the first step.
• Monitor Your Credit Report: Keep an eye on your credit report (via free or paid services) to confirm the update reflects correctly.

What Are The Documents needed In Hand?

• No Due Certificate (from your lender)
• Loan Closure Letter (official confirmation from the bank)
• Final EMI Statement showing zero outstanding balance
• Proof of Final Payment (with exact payment date)
• Written Confirmation of Closure (even if verbal confirmation was already given)
• Digital and Physical Copies of all the above documents.

Dispute It With the Credit Bureau

Head to your credit bureau’s official dispute portal. Choose “Loan Closure Not Updated” as the dispute reason. Upload your loan statement and closure documents. Most credit bureaus take 7 to 21 working days to resolve such disputes. Keep checking your email and credit report for updates. If the loan gets marked as “closed” after your submission, your credit utilisation will drop, which may boost your credit score. That one small update can make a big difference on your credit profile.

Fixing And Preventing Loan Closure Reporting Issues

If your loan still shows as active after 60 days, escalate the issue. Contact your lender’s grievance redressal team and file a formal complaint. If there’s no resolution, raise it with the RBI’s CRPC portal or the Banking Ombudsman. Always document your communication timeline—it’s crucial if legal steps are needed. To prevent issues in the future, request a foreclosure letter, reporting cycle details, and your NOC when closing a loan. Store everything safely and confirm bureau update timelines by email. Regularly monitor your credit report—accurate updates improve your score, reflect responsible financial behavior, and strengthen trust with future lenders.

Also Read: Gold Prices Soaring? Don’t Sell! Know How To Cash In Smartly With Gold Loans