What is ‘Settled’ Status in CIBIL Reports?
A ‘Settled’ status on your credit report indicates that a loan or credit account was closed after you paid less than the full amount owed. Such status can negatively impact your creditworthiness. To remove this status, it is essential to clear any outstanding balances with the concerned lender. In cases where the ‘Settled’ status is incorrectly reflected, you can raise a dispute with the credit bureau to rectify the information.
Is it Possible to Remove Settled Accounts from CIBIL Reports?
Yes, it is possible to remove settled accounts from credit reports. However, the only way to do so is to clear the outstanding balance amount and obtain a no-objection certificate from your lender. Once submitted to the credit bureau, they will update your loan status from ‘Settled’ to ‘Closed’.
How to Remove Settlement from CIBIL Report?
Sometimes, your CIBIL report may show ‘Settled’ even when you have never settled an account. In this case, you can request the bureau to remove the ‘Settled’ status by raising a dispute. Follow these steps to have the settled account removed from your CIBIL report:
1. Go to the official website of CIBIL and log in to your account with your credentials. If you do not have an account, create one to file a dispute.
2. Select the account with the incorrect settled status and attach the supporting documents if required.
3. Provide accurate details regarding the dispute and submit the request.
CIBIL will verify your claim, which may take up to 30 days.
Also Read: Why is Credit Report Important?
Is it Possible to Remove a Settlement Without Paying the Full Dues?
No, once a lender has reported a settlement to the credit bureau, it remains part of your credit history. Since lenders are required to report accurately to CIBIL and other bureaus, they cannot simply erase or remove a ‘Settled’ remark unless you resolve the dues.
How to Avoid Settling Loans in the Future to Protect Your CIBIL Score?
A loan settlement might feel like an easy option during financial hardship, but its impact on your CIBIL score can last for years. Once your credit report shows a ‘Settled’ status, lenders may hesitate to approve fresh credit or offer it only at higher interest rates. The good news is, with the right approach, you can avoid reaching that stage altogether.
- Build an Emergency Fund
Aim to reserve a specific amount of your income for essential expenses in a savings account. This cushion ensures that you don’t default on EMIs during unforeseen events. - Borrow Only What You Can Repay
Before taking any loan, calculate your EMIs using a Home Loan EMI Calculator and ensure they don’t consume more than 40% of your monthly income. - Prioritise Timely Payments
Set up standing instructions or auto-debits from your savings account for EMIs and credit card bills. Even one or two missed payments can snowball into mounting dues, which later push you towards settlement. - Keep Track of Your Credit Health
Check your CIBIL report regularly for errors, irregularities, or signs of over-leverage. Early monitoring helps you correct issues before they affect your score.
FAQs
No, not immediately. Credit scores take time to improve. You may start seeing gradual improvements over a few months as long as you continue making timely repayments on other active loans or credit cards.
After repaying the full outstanding amount, you can formally request your lender to issue a No Dues Certificate (NDC) or a closure letter. This document confirms that you no longer owe anything. Once the lender updates your account status to ‘Closed’ with the credit bureaus, it helps rebuild your credit history.
Yes, you can apply, but approvals can be challenging. A ‘Settled’ status indicates improper credit management and may affect the chances of approval.
A ‘Settled’ status remains on your CIBIL report for up to seven years from the date of settlement. This can negatively impact your credit score and reduce the chances of loan approvals during this period.
Yes, it is possible to remove the settled account from your credit report. You can pay the balance loan amount and obtain an NOC or No Objection Certificate from the lender. In case the account has been settled incorrectly, you can raise a dispute with the respective bureau and get it resolved.
