•29 June 2026•6 min read
Closed vs Settled Loans: CIBIL Score Consequences
When a borrower is unable to pay back a loan, banks may offer a "Settlement" where the borrower pays a part of the dues and the rest is waived. This is highly damaging to your credit.
Closed Loan
Repaid fully as per agreements. Boosts CIBIL score and shows high reliability.
Settled Loan
Lender accepted a loss. Score drops by 100+ points and stays on record for 7 years.