New Delhi, July 10 -- More formally known as foreclosure (or prepayment) early loan closure has a surprise impact on your credit report and credit score. This article will look specifically at and explain how foreclosure affects your credit score, what you can expect, and how to protect your credit.

Terminating any loan by repaying the total outstanding loan amount before the end of the tenure is called loan foreclosure, and this is pertinent with auto loans, personal loans, and home loans. Typically, borrowers do this to reduce interest cost, but it also creates a domino of credit-reporting triggers.

Although the update is mostly good, there are nuances with scoring models that could result in a momentary hit to your score.

So, expect...