How will Personal Loan Foreclosure or Settlement affect my CIBIL report ?

POSTED BY ON February 15, 2014 12:03 pm COMMENTS (4)


I took a personal loan 3 years back and is unable to pay the EMI from last 2 years.

Now, i got call from HDFC executive that bank is going to file a case since `DPD` has crossed 727 days. He told me that we can either do `SETTLEMENT` or `FORCLOSURE`. In SETTLEMENT, i have to pay some amount and in FORCLOSURE, he insisted me to pay the complete Principal amount and promised that late charges will be removed.

My doubt here is how these two will affect My CIBIL score ( currently my CIBIL report card is not good since credit card got rejected twice … )

Should I go with `FORCLOSURE` ? Please suggest.

Thanks in Advance !

4 replies on this article “How will Personal Loan Foreclosure or Settlement affect my CIBIL report ?”

  1. Azlal Khan says:

    I had sanctioned an education Loan for 3 lakh but only 69550 were disbursed and i got selected in india’s most prestigious engineering college so changed college in 2010 but forgot that loan.
    now when i applied for a credit card in 2014 and a PL i came to know my CIBIL score is 658 because 3 EMI were defaulted for that Loan and oustanding amount was 1,21000. I immediately paid all defalut amount and since than continuously paying EMI.
    total repayment tenure is 33 months and i have paid almost 8 EMIs. If i repay all my outstanding amount now itslef to close the Loan Account which is 89353 thousand. Is there any possibility my CIBIL will get improved Immidaitely or can i avail any PL from HDFC or other financial institution.
    Kindly Reply back.

  2. Credexpert says:

    Dear Mr. Khanna,

    We would suggest that you do not opt for a settlement and instead repay the complete outstanding loan amount.

    Settlements are viewed negatively by lenders and also would negatively impact your credit score. It indicates that you are unable to service your EMI and hence have opted to waive off certain part of the loan amount.

    In either case, you should ensure that the NOC is obtained from the bank.


  3. says:

    @ Ashalanshu : Thanks for the answer.

    I will enquire this point to remove all DPD before getting it forclosed.

  4. ashalanshu says:

    Dear Gaurav, if you really want to improve your CIBIL score, opt full and final settlement. Please make sure that in case of forclosure, the DPD ‘ll be removed else it ‘ll still impact your future loan applications.



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