CIBIL Score: Does repaying the loan early spoil the CIBIL score, credit card holders should also know this...


Credit Score- If you have taken a loan then repaying it is your priority. Many people, after taking a loan, are busy trying to repay it as soon as possible. Many people want to finish the loan as soon as possible by making a prepayment of a home loan or prepayment of a car loan.


Do you know that if you repay the loan early, it can have a negative impact on your credit score? If you repay your loan in full or close a credit card after settling the balance, your credit score may fall.

There can be many reasons behind the change in your credit score. Closing the loan account after repaying the loan for a short period can have a negative impact on your credit score.
You should know how your credit score is calculated. Along with this, it is also important for you to know why your credit score falls due to repayment of the loan. It is also important for you to know what you should do to improve your credit score.

Things like payment history, credit utilization, length of credit history, new credit, and credit mix are important in determining your credit score. If you pay your monthly installments on time and keep paying the minimum amount due, your payment history improves.

If you have a loan credit of ₹ 500000 available and you take a loan of ₹ 3 lakh, then your credit utilization ratio remains better. The length of your credit history is also determined by the age of your credit account.

If you repay the loan prematurely or close a credit card, your credit utilization ratio increases, which has a negative impact on your credit score.


Closing an old credit card or loan account reduces the average age of your credit history, which has a negative impact on your credit score. If you close any one loan account then the variety of your credit types reduces, and this also affects your score. Credit bureaus report every 30 to 45 days, so if you have made a payment recently, there is less chance of it having an immediate impact on your credit score. Loan repayment, late payment, or credit inquiry also affects your credit score.

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