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Why Your Credit Score Doesn't Immediately Jump After Closing A Personal Loan
- •Clearing your final personal loan EMI does not instantly boost your CIBIL score because lenders must first report the closure to credit bureaus.
- •Under RBI rules, credit institutions must update information fortnightly, but lenders typically take 15 to 30 days for payment updates to reflect.
- •A credit score depends on multiple factors including payment history, credit utilisation, credit age, and recent enquiries, meaning closing just one loan may not immediately change the overall score.
- •Borrowers should check their credit report to ensure the account is marked as closed rather than settled, and avoid taking new unnecessary loans just to boost the score.
Key Questions Answered
Closing a personal loan does not cause an immediate jump in your CIBIL score because lenders must first report the closure to the credit bureau, a process that can take 15 to 30 days. Furthermore, a credit score is influenced by multiple factors including your overall payment history, credit utilisation, and credit history age, meaning the score does not change instantly just from closing one account.
Under RBI rules, credit institutions are required to update credit information fortnightly starting from January 1, 2025. However, the exact timing of when a consumer will see these changes reflected on their report can still vary.
An account marked as "closed" indicates that the total outstanding balance has been paid off in full. In contrast, an account marked as "settled" means the lender accepted a lesser amount than what was originally due, which can negatively impact your credit profile and future access to credit.
