NOC after loan settlement: documents to collect and how settlement affects your CIBIL score

After a loan settlement, collect a No Dues Certificate or No Objection Certificate (NOC) from the lender, along with the settlement letter and a receipt for every payment, then check that your CIBIL report shows the account as settled with a zero balance. This guide is for borrowers who have settled, or are about to settle, and want to close the account properly and protect their credit score.

No Dues Certificate after loan settlement: documents to collect

How to get the NOC after loan settlement

1. 1Pay the final instalment into the lender's official account and save the transaction reference.
2. 2Email the lender's customer care or branch, quoting your account number, and request the NOC or No Dues letter.
3. 3Check that the letter names you, the account and the settlement, and says nothing more is payable.
4. 4For a vehicle loan, also ask for Form 35 to remove the hypothecation at the RTO.
5. 5Store paper and scanned copies of every document permanently.

Secured loans: getting your property papers back

Since December 2023, RBI requires banks and NBFCs to return all original property documents and remove any registered charge within 30 days of full repayment or settlement. If the delay is the lender's fault, it must pay ₹5,000 for each day of delay.

How loan settlement affects your CIBIL score

Lenders report every account to the credit bureaus: TransUnion CIBIL, Experian, Equifax and CRIF High Mark. A settled account is reported as 'Settled', which tells future lenders that the full amount was not repaid. It lowers your score and can make new credit harder to get for some time, though missed EMIs before the settlement usually do more damage than the settlement itself.

Can 'Settled' be changed to 'Closed'?

Yes, if you later pay the amount that was waived. Ask the lender in writing to update its reporting to 'Closed', and keep its confirmation.

How to fix a wrong entry on your credit report

If the account still shows an overdue amount after settlement, raise a dispute with the credit bureau and attach your NOC and payment proofs. Under RBI's rules, complaints must be resolved within 30 days, and the lender and bureau must pay ₹100 per day for delays beyond that. Lenders now report data to bureaus every fortnight, so corrections appear faster than before.

How to rebuild your CIBIL score after settlement

• Pay every remaining EMI and card bill on time; payment history matters most.
• Keep credit card use below about 30% of the limit.
• If needed, start again with a secured credit card against a fixed deposit.
• Avoid applying for several loans at once; each hard enquiry is recorded.
• Check your credit report every few months for errors.

If the lender delays your NOC or calls continue

Write to the lender's grievance redressal officer with the settlement letter and payment proofs. If there is no satisfactory reply within 30 days, complain to the RBI Ombudsman at cms.rbi.org.in. If recovery calls continue after you have paid, include them in the complaint.

Conclusion: your NOC after loan settlement finishes the job

A settlement is complete only when you hold the NOC after loan settlement, the receipts and an updated credit report. Collect them, keep them permanently, and start rebuilding your CIBIL score straight away.