Paying your final personal loan EMI does not guarantee an immediate boost to your CIBIL score. Updates often take 15 to 30 days to appear in reports. Since January 1, 2025, RBI rules require fortnightly updates, but many factors like payment history and credit usage also shape your final score.
Paying the final equated monthly instalment (EMI) on a personal loan does not guarantee an immediate improvement in the borrower's CIBIL score. The lender must first report the loan closure to the credit bureau, after which the updated information is processed and reflected in the credit report.
Under Reserve Bank of India (RBI) rules, credit institutions are required to update credit information every fortnight from January 1, 2025. However, the time taken for the revised information to appear in an individual's credit report can vary.
Moreover, closing a loan is only one of several factors that influence a credit score. According to TransUnion CIBIL, payment history, credit utilisation, the age of credit accounts and recent credit enquiries also affect an individual's credit profile. Consequently, a borrower may see no immediate change in the score even after repaying a personal loan in full.
Credit bureau updates are not necessarily reflected in the consumer's report immediately after the payment. According to CIBIL's consumer guidance, recent payment updates may take around 15 to 30 days to appear, depending on the reporting and processing cycle.
For instance, a borrower who repays a personal loan on October 5 may still see the earlier account status when checking the credit report a few days later.
Borrowers should also distinguish between an account marked as 'closed' and one reported as 'settled'. A fully repaid loan should be reported accurately, in accordance with the repayment arrangement. An incorrect status could affect how lenders assess a future credit application.
Consider a borrower who has a personal loan, two credit cards and a home loan. Closing the personal loan removes one active credit account, but the utilisation of the credit cards, repayment history and other outstanding obligations continue to influence the credit profile.
The age of credit accounts and recent applications for credit also remain relevant. As a result, one borrower may experience a modest improvement, another may see no immediate movement, while a third may notice a change after updated information is processed.
CIBIL recommends paying dues on time, maintaining control over credit utilisation and avoiding multiple credit applications within a short period.
Check the account status, outstanding balance, payment history and date of the latest update. If the loan continues to show an incorrect balance or status after a reasonable reporting period, contact the lender and request a correction.
A dispute can also be raised with CIBIL if the information reported is inaccurate. However, the bureau cannot independently alter account information without the required confirmation from the concerned credit institution.
Ultimately, closing a personal loan reduces outstanding debt, but a credit score reflects a borrower's broader credit history. Allow sufficient time for the reporting process, verify that the account has been updated correctly and continue meeting other credit obligations on schedule.