Imagine needing a personal loan urgently for an emergency or credit to buy your first home. You clear all your dues, believing your record is clean. But when you apply for a loan, the bank rejects your application because your credit score has not yet been updated. For borrowers in India, this has become a sad reality.

A delay of even a few weeks in updating information with the credit bureau can decide whether a person gets a loan, how much interest they pay, or if they are denied altogether.

IndiaToday.in spoke to a few people who have faced the issue. For a 39-year-old professional from Noida, the problem started during the Covid period.

“During Covid time, my credit card spending rose significantly due to family emergencies. I was paying every month, but couldn’t pay for two months. Following that I took a decision to borrow a personal loan and clear that entire loan amount. However, to my surprise I found that my credit score (which was hit due to the two defaults) did not improve after months,” he said not wished to be named.

He added that even after clearing the dues, his credit report still shows the loan as active.

“I wrote to the bank and they said they have closed the credit card loan. But even today on CIBIL that loan shows up as active. While my CIBIL score has improved since then, getting old loan accounts closed remains a difficult task. The low credit score that I had for a while did not impact me since I had no requirement for a loan, but what if I did require? This is why I feel it becomes important for organisations like CIBIL to be proactive and come up with clearer measures to update ratings when loans are cleared,” he added.

Another borrower, a 45-year-old professional from Noida who wished to be anonymous, shared how a small mistake followed him for years.

“I took a credit card in initial days of career with limit of around Rs 50,000 not for my use but for a friend who needed it. He defaulted on a payment and a small fine was added to the card for it. He returned the card clearing his dues, barring the fine amount. It later came back to bite me as it had compounded to a significant amount, impacting my credit score,” he said.

Although he later cleared the dues and improved his credit score, the experience left him cautious. “I paid the amount, clearing it but the impact was there. Now my credit score has improved as I pay my credit in advance but that incident did affect me and it took time for the loan to disappear from my credit history,” he added.

Banks and non-banking finance companies depend on these scores to decide whether to lend to someone and at what rate. But borrowers say the system often fails them when updates are delayed, errors are not fixed quickly, or closed accounts keep showing up as active.

HOW DELAYED UPDATES AFFECT BORROWERS

According to Atul Monga, CEO and Co-Founder of BASIC Home Loan, even a short delay in updating records can affect a borrower’s chances. “Delay in rectifying errors in the credit report could lower your credit score which may lead to rejection of loan application or getting the loan approved at higher interest rate,” he said.

Anand Agrawal, Co-founder and CTO of Credgenics, explained the risks further. “Delayed credit score updates can create serious issues for borrowers when applying for loans or credit cards. If recent positive changes, such as clearing debts or paying off bills, are not promptly reported and updated in credit report, lenders may see an outdated score, resulting in higher interest rates, limited borrowing options, or even rejection,” he said.

Agrawal added that the Reserve Bank of India (RBI) has already stepped in by enforcing stricter timelines. From January 2025, banks and credit bureaus must update records every 15 days instead of monthly or longer cycles. “This significant move was driven by the need to ensure faster, more accurate, and fair credit assessments for borrowers. Stricter update intervals help borrowers get quicker recognition for positive credit behavior, reduce the risk of loan rejection due to outdated data and bring India’s credit reporting system in line with global standards,” he said.

HOW TO PROTECT YOURSELF

Experts suggest that borrowers must be proactive in monitoring their reports.

Monga advised, “If your credit report does not reflect recent loan payments or cleared outstanding dues, you can easily get it rectified by logging in to the credit bureau’s website and submitting dispute resolution form, or by contacting them directly. It is important to review your credit report regularly, ideally once every quarter, to stay informed and take corrective action if needed. If you are planning to apply for a loan in the near future, consider checking your credit score more frequently to ensure it is error-free.”

Agrawal recommended steps for borrowers if repayments are not updated.

“First, secure all evidence of repayment transaction receipts, bank statements, NOC or loan closure letters. These documents will be crucial if there’s a dispute. Banks and NBFCs are required to update credit bureaus at least once every 15 days. If your repayment is very recent, wait out this period before raising a concern. If the issue is not resolved, escalate it to the bank’s grievance redressal officer, and finally raise a dispute with the credit bureau directly,” he said.

WHAT CIBIL SAYS

TransUnion CIBIL clarifies that it only collects data from banks and lenders, and cannot make changes without confirmation. “CIBIL cannot delete or change records reflecting on your CIR on its own; we simply collect records of individuals provided to us by our members (Banks and financial institutions),” the bureau states on its website.

It also says there is no “defaulters list” maintained by CIBIL. “The decision to grant a loan is solely dependent on the credit policy of the Credit Institution,” it notes.

CIBIL admits that some inaccuracies can happen because of delayed reporting. Since lenders generally submit data within 30–45 days, a repayment made during that time may not appear in the report immediately. If the update is missing even after two months, borrowers are advised to raise a dispute.

As per the Credit Information Companies (Regulation) Act of 2005, CIBIL cannot modify any information without confirmation from the bank or financial institution that reported it.

While RBI’s decision to reduce update timelines to 15 days has been welcomed, borrowers say they still face long delays when clearing past issues. For people like Jatin or the unnamed professional from Noida, even one error left unresolved for months can mean lost opportunities and higher costs.

For now, the advice from experts remains clear: keep track of your credit reports, keep evidence of every repayment, and raise disputes quickly when errors appear. With CIBIL playing such a critical role in the financial lives of millions, timely updates and transparency in records will be key in reducing stress for borrowers.

The story is the second article of our 3-part series on CIBIL Decoded. Stay tuned for the next article in the series.

(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)

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