Repayment of loan is one of the most troubling activity for a loan borrower. Initially, borrowers are excited to take a loan from a bank as it increases their bank balance enormously. Good score in India is one of the most crucial factors for a bank to disburse loan to a borrower. But, with time some borrowers are not able to regularly repay their loans. Given an opportunity, most of the borrowers want to repay their loans at one go or they want to foreclose their loan. Borrowers are not able ascertain impact of this behavior on their score.
Most of the borrowers think that by foreclosing their loans to banks, they would get good 
impact on their cibil score but, contrary to popular belief, foreclosing a loan impacts negatively on your cibil score. When a bank sanctions you a loan amount then, a bank takes into account its asset liabilities management practices and prepare a amortization schedule that will generate interest for a optimal period of time. Due to foreclosure of loans, banks need to let go of large amount from their end and their calculations for your loan gets into toss. To compensate that, banks would charge a foreclosure charge from you for prepayment.
Banks would foreclose your loan on your request and payment. You may think that from now onwards your relationship with bank has closed but all this information would be updated in your cibil score. This information would be shared among all other banking and financial institutions. Good score in India is always considered to be above 750 in cibil records. Due to foreclosure, your cibil score might be affected in double digits in southwards direction and may take it below a score which is considered a good cibil score in India. Hence, a best practice would be to do a cost benefit analysis before foreclosing any loan in India. A cibil score is most important decision criteria for disbursing a loan and hence, you should take into account whether your future credit requirements would be effected by negative impact of foreclosing a loan and then take a decision accordingly.
