Fine Print

Could I ask a lender not to report a paid loan to credit bureaus?

Lenders don’t have to report all loans to all credit bureaus, but they tend to do so since it helps all lenders make better decisions.


A reader wonders if he can ask a lender not to report information about a paid-off loan to credit bureaus. If the loan is related to negative information, discussing alternatives directly with the lender might be a better option.

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Do lenders have to report all loans without exception to credit bureaus? What if you don’t want them to report a certain loan? Will they be able to accede to your request? Reader Darren, for one, is wondering if he can ask a lender not to report a paid loan to the credit bureaus.

Check out all the answers from our credit card experts.

Ask Poonkulali a question.

Lenders don’t have to report to credit bureaus

Lenders are not legally obligated to report all loans to credit bureaus. In fact the Fair Credit Reporting Act only lays down how to report information to credit bureaus, and it does not require lenders to report all loans to credit bureaus. And there’s no stipulation that they should report to all the major credit bureaus.

Practically speaking, though, lenders do tend to report on loans to credit bureaus. The more information that creditors report to credit bureaus, the better the picture it provides of a borrower. Thus, lenders don’t want to undermine their own ability to make an informed decision by not providing loan information to credit bureaus.

There are some smaller lenders that might not want to go through the procedures and expenses associated with credit reporting, but most lenders tend to report.

See related: How do I get my lender to report payment activity to the credit bureaus?

Negative input on credit report

Darren, it sounds like there was some issue with this loan, such as a delinquency or collection issue, so that you don’t want it reported to a credit bureau.

I don’t know why you wouldn’t want a lender to report a loan that you paid off in a timely manner without any issue, since that is only likely to boost your credit score.

In general, negative credit input will besmirch your credit report for seven years. In case there was a late payment issue with this paid loan, the information could stay on your credit report for seven years.

And if the issue is that the loan was sent to a collection agency for follow up before you paid up, that information too will blemish your credit report for up to seven years, beginning from the date of the delinquency. The original lender will write off your loan after selling it to a collection agency.

And if the lender had to resort to a lawsuit to get you to pay off your loan, that information could similarly cast a shadow on your credit report for seven years.

On another note, if you had filed for a personal bankruptcy, that information stays on your credit report for ten long years.

See related: Credit bureaus tighten reporting rules: Who wins, who loses?

How to deal with negative items on your credit report

While lenders don’t have to heed your request to not report a paid loan, they are likely to give you an ear if you have been a good customer, and if there were extenuating circumstances affecting the loan.

For instance, you may have fallen ill or had a bad accident, and run into payment issues. On the other hand, if you have no such bad luck to blame, or if you have had other delinquency issues, the lender will likely not take your request into account.

In case you have had a loan settlement and not paid off the loan in full, the lender is also not likely to honor your request. As a matter of business practice, it will want to report this information so that it gives all lenders a better idea about your creditworthiness.

If you don’t agree with the lender and believe that the information it will report to the credit bureaus is inaccurate for some reason, you could also dispute the information.

See related: 10 surefire steps to get errors off your credit reports

What happens when you dispute an error on your credit report

Once you get a copy of your credit report with this information, you could go ahead and contact the credit bureaus and ask them to erase or correct the information. The credit bureaus will then have to launch an investigation into the issue and give you a report after they have come up with their findings.

In case a credit bureau rules in your favor, it would have to make a correction to your report and send out notices of the correction to anyone who received your credit report in the previous six months. The credit bureau would also have to send the correction to anyone who received your credit report for employment-related purposes in the last two years.

If the dispute is not resolved to your satisfaction, you could also ask the credit bureau to provide input about the dispute in your future credit reports. That would provide your side of the story to others gauging your creditworthiness.

Of course, disputing a credit report with a credit bureau is easier said than done, given all the horror stories out there! Darren, that’s why if you have any extenuating circumstances, your best bet would be to plead your case with the lender. Good luck!

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