If you have fully repaid your car loan but your CIBIL report still shows the account as active, your credit score may suffer unnecessarily. Lenders report repayment data to credit bureaus, and updates are not always immediate. This article explains why this happens and what Indian borrowers can do to fix it.
Why the account may still show as active
A closed car loan should be reported to CIBIL by the lender with a "closed" status and a zero outstanding balance. However, this update can be delayed because of:
- Reporting cycles between the lender and the credit bureau.
- Pending no-dues certificate or loan closure documents.
- Administrative errors at the lender’s end.
- Time taken by CIBIL to process and reflect the updated status.
Exact timelines vary by lender and by credit bureau, so you should verify the expected update period with your bank or NBFC.
Step 1: Confirm your loan is actually closed
Before contacting CIBIL, make sure there is genuinely nothing left to pay.
- Collect the no-dues certificate or loan closure letter from your lender.
- Check that the hypothecation on your vehicle has been removed with the Regional Transport Office (RTO), if applicable.
- Review your latest loan statement to confirm the outstanding balance is zero.
Without these documents, it will be difficult to prove to CIBIL that the loan has been repaid.
Step 2: Contact your lender first
The lender is responsible for sending updated account information to CIBIL. Write to your bank or NBFC’s customer care or grievance redressal department. Request them to:
- Update the loan status to “closed” in their records.
- Report the zero balance and closure date to CIBIL.
- Provide written confirmation or a reference number for your complaint.
- Log in to the CIBIL consumer portal and locate the dispute resolution section.
- Select the car loan account and choose the issue, such as “account status incorrect” or “balance incorrect.”
- Upload supporting documents, including the no-dues certificate and closure letter.
- Submit the dispute and note the reference number.
Keep copies of all emails, letters, and reference numbers. Ask the lender how long the update will take to appear on your CIBIL report.
Step 3: Raise a dispute with CIBIL if needed
If the lender confirms the closure but your CIBIL report still shows the account as active after a reasonable period, you can raise a dispute directly with CIBIL.
CIBIL typically forwards the dispute to the lender for verification. The lender must respond within the timeframe specified by CIBIL, after which the bureau updates the report if the information is confirmed to be wrong.
Documents to keep ready
| Document | Purpose |
|---|---|
| No-dues certificate | Proves the loan is fully repaid. |
| Loan closure letter | Shows the official closure date and status. |
| Latest loan statement | Confirms zero outstanding balance. |
| NOC from lender | Required for hypothecation removal at the RTO. |
What to watch for
There is usually no fee from CIBIL for raising a dispute, but your lender may charge for duplicate documents or letters. Fees vary by institution and must be confirmed directly with them. Also, credit score improvement depends on your overall credit profile, not just this one account.
Avoid paying third parties who claim they can “fix” your CIBIL score quickly. Only the lender and CIBIL can correct legitimate reporting errors through the official process.
Verify all fees, timelines, and procedures with your lender and CIBIL before acting. This article is for general information only and is not financial or legal advice.