Why Old Closed Loans Still Appear in Your CIBIL Report

A lot of borrowers in India are unnerved when they find stale loans appearing on their credit report long after having fully repaid them. As a standard practice, once a loan is closed it should disappear from the credit report quickly. But credit reporting doesn’t work this way.

Old closed loans still show up on your credit report for good reasons, and often times, to your advantage. Knowing why these records linger and how they influence your credit score can assist you in managing your financial reputation more effectively.

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Your credit report is maintained by credit bureaus like TransUnion CIBIL, which receives details about your borrowing and repayment activity from banks and other financial organizations. The report details your entire credit history, such as open loans and closed accounts, repayment behaviour and credit inquiries.

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Credit Reports Preserve Long-Term Financial Memory

One of the biggest reasons old closed loans stick around in your credit report is that credit bureaus keep a very detailed log of your financial behaviour for years. This history allows lenders to assess your creditworthiness from your previous repayment behavior.

Closed loans indicate whether or not you’ve paid your dues. A timely paid ‘closed’ loan shows prudent borrowing habits and establishes goodwill with future lenders.

Eliminating such accounts shortly after closing them would stop lenders from evaluating your long-term credit habits. So, closed loans still exist on your record.

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Closed loans can fortify your credit profile.

Many borrowers view closed loans as superfluous marks, but they can actually improve your credit score. Successfully repaid loans represent financial competence and repayment discipline.

Older accounts also add to the age of your credit history. A longer credit history typically bolsters credit strength as it provides lenders more data about your financial behavior.

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Closed status is not the same as active debt.

Remember, a closed loan on your credit report does not mean you still owe money. The statement says so explicitly – the account is ‘closed’ or ‘paid in full’.

Lenders glancing over your report can quickly see what is active and what account has been closed. A closed loan with a positive repayment history is usually considered a good thing and will not hurt your creditworthiness.

But if a closed loan is erroneously listed as open or lists erroneous payment delinquencies, it can hurt your credit. In those instances, you should file a dispute with the credit bureau.

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For how many days closed loans continue in a CIBIL report.

Closed loan accounts can stay in your credit report for years. The specific length varies based on the credit bureau’s data retention rules and regulations.

This time gives lenders a chance to check out your repayment history and see whether you’re a responsible borrower. While the influence of older accounts on your credit score diminishes with age, the record persists in your credit history.

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When Should You Be Concerned?

Having a closed loan per se is not an issue. But you should notice how that loan is reported.

You may need to do something if your loan was marked active, your report has a balance due even though you paid off the loan, a late payment is inaccurately reported or the account shows an improper settlement.

These mistakes can lower your credit score and impact your ability to get credit in the future. Checking your credit report routinely assists in finding and fixing errors.

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How to Make Sure Closed Loans Show Up Correctly

Trouble-free, maintain copies of loan closure statements, no dues certificates and repayment confirmations from your lender. These records can assist you in dispute if incorrect information surfaces on your credit report.

By reviewing your credit report every few months, you can be assured that your repayment history is being properly documented and that you’re maintaining a good credit profile.

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Why You Shouldn’t Ask to Remove Positive Closed Accounts

Certain borrowers attempt to delete closed loan accounts from their credit report, believing that this will bump their score up. In fact, eliminating positive credit history could actually weaken your credit.

Closed accounts in good standing add to your credit history length and responsible borrowing behaviour. Keeping these accounts on file tends to favor a more robust credit profile.

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FAQs

Why will my CIBIL report have records of closed loans?

Closed Loan records stay in the borrower’s Credit File to enable lenders to assess a person’s credit conduct through his/her payment history.

Will closed loans have a negative impact on my Credit Score?

Closed Loans with a good repayment status will have a positive impact on the borrower’s Credit Profile by showing that the borrower has a good credit history as he/she is a responsible borrower.

How long will closed loans remain on my Credit Report?

Closed loans are generally retained on the borrower’s Credit Report for a number of years, depending on the policies of the credit bureau.