CIBIL: Settled your loan? Here's how it will impact your credit score

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credit score. Missed payments: A settlement typically happens after you've missed some loan payments, and these missed payments will be reported on your credit report, which can bring down your credit score. Unpaid debt: The settlement itself indicates that you didn't repay the loan according to the original agreement.

This can be a negative mark on your CIBIL history. Settled status: The loan account will be listed as ‘settled’ on your credit report, which can be seen less favourably by lenders than a fully repaid account. The impact on your score can vary depending on your credit history and the severity of the delinquency.

Generally, a loan settlement can bring down your score by 100 points or more. However, it’s important to remember that your credit score is based on several factors, and over time, the impact of a settlement can lessen with a good payment history on other accounts. How much delinquency was there? It is vital to note how many payments were unpaid before you opted for settlement.

The longer you were delinquent, the greater the negative impact. Credit history: If you have a strong credit history with a good track record of on-time payments, the settlement may have a less significant impact than if you already have a history of missed payments. ALSO READ: These are 5 warning signs of credit score problems.

Details here While loan settlement can hurt your credit score, it can also be a way to manage debt if you're struggling financially. It's important to weigh the pros and cons carefully before deciding if this is the right option for you. Consider talking to a credit counselor or financial advisor for personalised guidance on your situation.