Loan Closed but Not Updated in CIBIL – How to Fix It?
Even after closing a loan, sometimes an active loan still appears in the CIBIL report. This creates the biggest problem for people who have already paid off their loan. In some cases, the loan may still show an overdue status. Even after Loan Closed, the written-off status may remain or it may still show overdue. Because of this, people may face difficulty getting a new loan in the future.
If your report shows such an active loan, there can be several reasons behind it. Here, we will explain what those reasons might be and how you can quickly close or correct the active loan showing in your report. We will explain the method step by step.
Common causes for the discrepancy:
When you close a loan, it does not get updated in the CIBIL report immediately. It takes some time. Earlier, the minimum time was about 30 days, and sometimes it could take even longer. But now, according to the RBI guidelines, banks have to report to the credit bureau every 15 days. So in this case, it may take around 15 to 20 days, and at most it can take up to 30 days.
Sometimes what happens is that when you close a loan, your individual data is not sent to CIBIL immediately. Banks usually accumulate their total data and then send it to CIBIL. Because of this, sometimes it may take a little more time, but it should not take more than 30 days.
However, in some cases it is seen that even after 30 days or 45 days, the loan is still showing as active in the report. Today also a customer called me and said that he closed two loans at the same time in 2023. One loan was updated within a month, but the other loan has still not been updated even after almost two years. That loan was from a cooperative bank.
He had also received a No Dues Certificate and the loan was already closed. The bank had also mentioned it clearly in a letter. But still it is not getting updated. This usually happens because of inter-departmental miscommunication within the bank.
Now let us understand in more detail why this happens
Suppose a bank sends data to CIBIL, but inside the bank there are many different departments. Here I am mentioning a few departments just to explain, such as customer service, account department, CIBIL cell, and legal department. There are actually many more departments, but the CIBIL cell is the one that sends your data to the credit bureau, which means to CIBIL.
For example, when a loan is closed, the CIBIL cell should send that update. But when you close a loan, the data first remains with the account department. The account department needs to forward that information to the CIBIL cell. Until the data reaches the CIBIL cell, they cannot send the update to CIBIL. In some cases, this process can take a lot of time.
For instance, if a loan has a suit filed status, when you make the payment it gets updated in the account department. However, until the legal department gives its clearance, the CIBIL cell does not send the data to CIBIL. Because of this, the update can take more time.
Clearance from the legal department also takes time. This problem is mostly seen in PSU banks. Once a case goes to court, it does not get closed quickly. Until the court case is closed, the CIBIL cell does not receive clearance from the legal department. Because of this, sometimes it takes a very long time for the account to be updated in CIBIL.
This can also happen if there is any due pending from your side.
In some cases, it is seen that the customer has paid all the EMIs, but still the account is not closed. Sometimes the problem is that among all the EMIs, one EMI had failed. Later the customer deposited that EMI amount.
The bank deducted the money from the customer’s bank account.
But when the EMI bounced or failed, bounce charges were also applied at that time. Sometimes banks also add separate penal charges. Even after the EMI amount is paid, those penal charges may not have been deposited in the bank.
After paying all the EMIs, the customer thinks that the loan has been closed. But because the penal charges or bounce charges are not paid, some dues remain pending. Because of this pending amount, the bank is not able to close the account.
Another possible reason can be Pay Later services.
Recently many customers are getting this type of credit facility such as Amazon Pay Later service and Flipkart Pay Later service. Here, a credit limit is given to the customer. By using that credit limit, the customer can purchase products whenever needed.
After purchasing the product, the customer may have to pay the amount in EMIs, sometimes for 6 months. These EMI options are provided for the purchase. In this case, Amazon or Flipkart do not directly provide the money. A finance company provides the financing.
Even after the 6 months EMI period is completed, the loan for that particular product may get closed. However, the Pay Later service itself may still remain active. Because of this, the Pay Later service may still show as active in the report.
There, it does not show any overdue or such problem, it only shows the account as active. To close the Pay Later service, you will have to give a separate intimation there.
What to do to update the Loan closed status in CIBIL?
If your CIBIL report shows an active loan that you have already paid, then what should you do? The first thing you should do is pull out your recent CIBIL report. After checking the report, see where the problem is and why the loan is still showing as active.
If you read the report carefully, you may understand the reason to some extent. Apart from this, you can also contact the bank. You can ask them why the loan is still showing as active in the CIBIL report even though you have already paid it. You may get the reason from there as well.
Now suppose there is some due pending in your loan. As mentioned earlier, if any amount is pending, you should quickly pay the full amount and make sure to take a No Dues Certificate. Taking a No Dues Certificate is very important because the bank provides this certificate only when your loan is completely closed.
Once you receive the No Dues Certificate, you can confirm that your loan account has been closed. After that, you should raise a dispute online in CIBIL. When you raise a dispute in CIBIL, the problem or error showing in your CIBIL report can get resolved quickly.
You can raise a dispute in two ways
The first method is that you can log in to the CIBIL portal and raise a dispute online. There is also another method. You can go to the CIBIL portal and fill out a form to submit a complaint.
The second method is more powerful because there you can explain everything in detail and also attach documents. The chances of solving the problem are much higher in this method because you are sending the complaint along with supporting documents.
When you submit a complaint in CIBIL, CIBIL forwards that complaint to the bank for verification. Since you have attached documents and clearly explained the issue, the bank can easily understand that you have already made the payment and the loan has been closed. You also have the No Dues Certificate as proof.
This is the reason why the problem is resolved within no time and the bank sends the updated details to CIBIL.
If the dispute has already been raised in CIBIL and after the expiry of 30 days the problem is still not resolved, in that case, the consumer can raise the complaint with the Nodal Officer. The email address of the Nodal Officer can be obtained from the website of CIBIL.
If the problem is still not resolved even after that, the consumer can raise the complaint with the RBI.