does settlement affect cibil score

Yes, a loan settlement negatively affects your CIBIL Score. When a lender agrees to a settlement, it signifies that you paid a reduced amount instead of the full outstanding debt, which is marked as "Settled" on your credit report, unlike a favorable "Closed" status. This indicates negative credit behavior and can lower your score significantly. The "Settled" status remains on your report for up to seven years, which can make obtaining new loans or credit difficult in the future.