LSS Meaning in CIBIL: What It Is and How It Affects a Credit Report

When reviewing a credit report, individuals may notice the abbreviation “LSS” appearing next to one of their loan or credit accounts. The term LSS, short for Lender Settled Status, indicates that a loan has been settled for less than the total outstanding amount, and it plays an important role in how lenders interpret a borrower’s financial reliability. 

This article provides a detailed explanation of the meaning of LSS in a CIBIL report, its implications for a person’s credit report and score, and the practical steps that can be taken to resolve or improve this status over time. 

What Is LSS in CIBIL?

LSS in CIBIL stands for ‘Lender Settled Status’. It appears in the CIBIL report when a borrower and a lender agree to settle a loan for less than the total outstanding amount. In other words, the lender accepts partial payment as final closure of the debt. 

Let’s say a borrower owed Rs.1,00,000 on a loan but negotiated to pay Rs.70,000 as a one-time settlement. Once the payment is processed, the account may be marked as LSS (Lender Settled Status). 

How Does LSS Affect the CIBIL Report and Score?

LSS can affect your report or score significantly. Here’s how it plays out: 

1. Credit Score Drop – Since the LSS account is treated as a partial repayment, your credit score tends to drop sharply. The degree of impact depends on your overall credit profile. 
2. Reduced Loan Eligibility – You might find it harder to get new loans or credit cards approved if your credit report shows LSS, especially for high-value home or business loans. 
3. Long-Term Record – The LSS tag remains visible in your report for several years (typically up to 7 years). During this time, it can continue influencing lenders’ decisions. 
4. Less Favourable Terms – Even if your application gets approved, you may not secure a competitive interest rate.  

Also Read: STD, LSS, and DPD in CIBIL Reports 

LSS Account Status in CIBIL vs. Closed Account: The Key Difference 

It’s easy to confuse LSS with a “Closed” status—but the distinction is critical. 

Status Type	Meaning	Impact on Credit Score
Closed	Loan fully repaid as per the agreed terms	Positive impact; improves credibility
Settled (LSS)	Loan partially repaid through settlement	Negative impact; reduces score

So, while both may seem like the loan is over, only a ‘Closed’ status confirms complete repayment with no pending dues. 

How to Fix LSS in a CIBIL Report?

If your CIBIL report shows an LSS tag, don’t panic—it can be improved with the right steps. While you can’t erase it instantly, you can gradually rebuild your credit profile. Here’s how: 

1. Repay the Remaining Amount (If Possible)

Reach out to your lender and ask if you can pay the remaining balance to convert your status from ‘Settled’ to ‘Closed’. Some lenders may agree, especially if the amount is small. Once done, request them to update your account status in the CIBIL report to ‘Closed’. 

2. Obtain a No Dues Certificate 

After repayment, always ask for a No Dues Certificate (NDC) or ‘Letter of Closure’. This serves as official proof that your account has no pending obligations and helps in correcting your record with CIBIL. 

3. Raise a Dispute with CIBIL

If your lender fails to update your record, you can visit the official CIBIL website and file a dispute. Provide relevant documents (such as the NDC) and request correction of your account status in the CIBIL report. 

4. Maintain a Positive Credit Pattern

While the LSS status may stay for some time, you can offset its effect by building consistent repayment habits: 

• Pay all EMIs and credit card dues on time. 
• Keep your credit utilisation ratio below 30%. 
• Avoid taking too many loans simultaneously. 
• Check your credit report regularly to track progress. 

Why Knowing Your CIBIL Report Account Status Matters?

Most people focus on their credit score but overlook what the account status section says. That’s where you find essential information—like whether your loan is ‘Closed, ‘Settled,’ or ‘Written-off’. 

Lenders analyse both score and status together before approving new loans. A clean account status can increase your chances of approval.