Impact of Settled and Closed Status on Your CIBIL Score: What You Need to Know?

The CIBIL report is very important for any Credit card user. Users are aware that their credit score and the chances to qualify for a loan depend on their credit report. When you repay your debt on time along with all the payments on time, this will increase your credit score. Doing this will mark your loan status as “closed”. This also means that you will be able to qualify for more future loans.

And if you are unable to repay your loan along with interest rates, the bank will “Settle” the loan. People usually misunderstand the concept of “Closed” and “Settle” statements in their credit reports. The difference is huge between these two clauses.

If your loan case is marked as “Closed” then it is a good sign and shows that you have closed the loan by repaying the loan amount along with the interest rate on time. But “Settled” will show that the loan case was settled and never closed due to the inability of the user to repay the amount along with interest.

Settled and Closed Status on Your CIBIL Score

CIBIL Report: Settled or Closed Status –

As stated earlier. A loan is regarded as ‘closed’ when the whole amount has been paid off with the whole interest. If you have completed all your EMIs, the bank will issue a loan closure certificate or loan completion certificate for you. This will be present in your CIBIL report and ‘Closed’ will make you look like a responsible borrower.

In contrast to the closed status on your CIBIL report, if the status is changed to ‘Settled” that means that the borrower is not able to pay the loan with interest. This also means that the bank has realized that the loan is only going to incur a loss.

As you start missing your EMI payments, the bank will initially send reminders for the same but at a point, the bank offers a one-time settlement. This happens when the bank is certain the full loan repayment is not going to happen. One-time payments are banks’ way of getting whatever they can get and the rest of the amount will go to the loss record of the bank.

 Impact of “Closed” on your CIBIL Report –

CLOSED – As stated above that a loan case noted as “Closed” states that the balance has been paid in full and there is no due amount. It can create a good impression in front of your lender as they will get to know the details as well. The status will convey the message to you that “I am a potential borrower and can efficiently repay your money within a given time”. The “closed” status will also help you qualify for bigger loans as well.

Closed cases in your CIBIL will also increase your credit score. And your credit history will also come as strong.

Impact of “Settled” on your CIBIL Report –

SETTLED – Your credit score is the main requirement for your future loans. But the status “Settled” is not going to help you in getting a good loan at all. Usually, after the status lenders prefer not to provide loans to such users. They can also be called “defaulters”.

The “settled” status in your CIBIL report will knock off around 70 to 100 points from your credit score. Making your credit score go down. The impact of this status on your CIBIL report is just like a mark that says you failed to repay the whole amount along with interest.

The “settled” status on the report will not only make you not-so-qualified for a loan amount but even if some lenders agree to give you a loan, you will probably be getting higher interest rates charged on the same. Lenders usually see these types of users as risky borrowers and they prefer not to put any money on it. But when they do, it is inevitable for them not to think about making a profit.

What can I do to avoid settlement?

There are a few ways through which you can try and stop the bank from putting “settled” on your case so that your history does not become weak.

First, you can try for a family loan. This is finding the person in your friends and family who can help you with your payments. Once you are back with the right measures and have money, you can repay the friend or relative who helped you out.

Secondly, you can try and have a word with your bank. They might understand you and will be able to help you if the situation you are in is extremely critical. The bank can increase your tenure which means you will have more time to repay the bill after that. Increasing the loan tenure can make a huge impact on your EMI payments as the amount will be now distributed in a larger time frame, and the EMIs will decrease accordingly.

These ways will at least help you regain your foothold and can somewhat reduce the impact on your CIBIL report.


The loan case being closed and settled are two different things and have large impacts on your CIBIL Score. The close status has a very positive impact whereas the settled has a negative. People sometimes mistake closed for settled but they are not.

Usually, when a bank offers a settlement, people take it when they cannot pay the amount. But they are unaware that what that settled status can do. Not only there is no awareness in people of settled status but it is also because of poor research into the long-term impact of a settlement offer by the bank.

Both cases are poles apart from each other where with one you get better opportunities and better chances to qualify for a new loan, while another one will drag your score down. Not just that but it will also ruin your chances of getting financial aid in the future. So, try to do research before planning on anything.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top