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Do Staggered Loan Repayments Effect CIBIL Score?

Education Loan Repayment and CIBIL Score

Paying Off An Education Loan Improves CIBIL Tremendously

Students everywhere will be very pleased to hear that yes, you will get a significant CIBIL score increase when your education loan is finally paid off. Let us take a look at this email from Prabhakar regarding paying a loan off in one large payment:


Dear CreditSmart, 

I paid 75% of my education loan one year back. Now during this one year period, I didn’t paid any amount. Now I am going to close the entire loan i.e the remaining 25% of loan. Will they affect the CIBIL score ? I worried abt this one year term.



twitter-sizeHi Prabhakar! Thanks for your email, it’s always nice to get a letter from someone who seems to have their credit under great control. First off, congratulations on paying off 75% of your loan last year, that’s truly excellent. It will be a great feeling when you pay off that last rupee this year.

We are not familiar with the terms of your loan, so if monthly payments were required and you’ve been skipping them so that you could pay it off in one large sum later in the year, then they may have reported your late payments to CIBIL. A year’s worth of missing payments would certainly have a negative impact on your score. However many educations loans are much more lenient, and I suspect you will be OK.

Great News!

Now to the great news! You will absolutely get a significant boost to your CIBIL score when you pay that last 25%. Educations loans are heavily weighted in the algorithms that determine your score. Having a paid in full loan successfully closed out will give you a score increase within 2 or 3 months of the final payment. With your education loan now out of the way, you will be free to pursue other loans with high chance of approval, so long as your income can cover it.

Jay Kaul

About Jay Kaul

Jay is a financial and credit expert and freelance contributor to CreditSmart. He's always keeping his eyes open for the latest credit card trends in India and provides a sharp insight on new entries into the market.

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