Personal Loan Settlement: The Hidden Cost to Your Credit Score

• Settling a personal loan means paying a lump sum lower than the outstanding amount, closing the loan.
• While it offers immediate relief from financial stress, a settled loan is not the same as a fully repaid loan.
• Lenders report settled loans to credit bureaus as "settled," not "paid in full," negatively impacting your credit score.
• This "settled" status can remain on your credit report for up to seven years, making future loans harder to get or more expensive.
• Settlement is a last resort for deep financial trouble; explore options like restructuring or extending tenure first.