A loan marked active or settled after repayment can inflate your reported debt and complicate new borrowing. Here is how to gather proof, seek a correction and escalate the complaint.
Paying off a loan is not the end of the process if the account still shows as open on your credit file. News18 says borrowers often discover that a repaid loan is still marked active or carrying a balance when they review their reports before applying for fresh credit, a mistake that can make their debt load look higher than it really is and interfere with new approvals.
The first step is to gather proof that the loan was actually cleared. According to LiveMint and Moneycontrol, that usually means keeping the no-dues certificate, the closure letter, the final repayment receipt and matching bank records. Those records matter because a loan marked “settled” is not the same as one marked “closed”, and the distinction can affect how lenders read the account history.
Even when the loan itself has been repaid, some linked formalities may still need to be completed. News18 notes that borrowers with secured loans should make sure related paperwork is finished as well, such as removing hypothecation from a vehicle registration certificate after an auto loan is paid off. That step is separate from the credit bureau update, but both can affect how the account is viewed.
If the account still appears active, the borrower should contact the lender directly and ask for the record to be corrected, GoodScore and LiveMint said. If the lender does not fix the error, the next move is to file a dispute with the credit bureau, such as TransUnion CIBIL, and upload the supporting closure documents. Because reporting can differ across bureaus, it is worth checking each major credit file rather than assuming one correction will automatically appear everywhere.
If the lender still does not resolve the matter, News18 says borrowers can escalate it through the company’s grievance or nodal officer route. If that fails after the required waiting period, the complaint can be taken to the Reserve Bank of India’s Complaint Management System. LegalClarity notes that closed accounts can remain on a credit report for years when they are reported correctly, but inaccurate active status or missing closure details should be challenged promptly.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
