Loan Settlement: A Temporary Relief, Permanent Credit Score Damage

• Loan settlement, while offering immediate relief from EMI payments, can severely damage your credit score for up to seven years.
• Banks categorize settled accounts as "settled," which is reported to credit bureaus, making future loans difficult or more expensive.
• Unlike full loan repayment, which keeps your credit record clean, settlement marks you as a risky customer.
• Experts advise settlement only as a last resort; consider restructuring or moratoriums if income is temporarily affected.
• Weigh long-term financial implications and explore alternatives before opting for loan settlement to protect future opportunities.