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loan settlement is a term that is often mistaken for loan closure however they are not the same if you pay off all your monthly installments on time and complete repayments as scheduled the lender will close the loan account and this is termed as loan closure the same information will be sent to your credit rating agencies and it may have a positive impact on your score as you have successfully paid the loan off hey guys this is pratna from clear tax and i will explain the effect of loan settlement on your credit score so lets begin firstly what does loan settlement mean now the meaning of loan settlement is explained with a scenario where supposedly you have taken a loan from a lender okay now you are genuinely unable to make repayments due to an illness injury job loss or some other reason in this case you inform the lender of your situation and request them to give some time off before you begin prepayments the lender may give you a one-time settlement option where you take some ti