Personal Loan Settlement: Understand the 7-Year Credit Record Impact

• Settling a personal loan means paying less than the full outstanding amount, often when EMIs are missed and the account defaults.
• Unlike full repayment, settlement is reported to credit bureaus with a 'Settled' status, negatively impacting your credit score.
• The 'Settled' status can remain on your credit report for up to seven years, making future loans harder to obtain or offered at higher interest rates.
• Banks view settlement as not adhering to the original agreement, even if the account is closed after payment.
• Settlement is a last resort for severe financial crisis; consider restructuring or temporary relief first to protect your credit history.