What is Written off and Settled in Credit Report?

4 min read

You would have came across the terms “Written Off” and “Settled” in your credit report. There are 4 RBI approved credit bureaus they are CIBIL, Experian, Highmark and Equifax. The term written off is explained below.


If the banks cannot recover the dues then it is reported as Written-Off (WO).The first objective of a bank in case of default is to recover the total due amount. Hence the banks always try to recover the dues from the borrower.

The written-off status is subdivided into Written-Off (Total) and Written-Off (Principal). In case of Written off – total, the 100% amount is written-off including principal and interest. In Written Off – Principal, total principal amount written-off is reported. The objective of reporting these 2 sections is to find out written-off interest.

Written off has a heavy negative impact on one’s credit score. Written off status in anybody’s credit report also mean that the person’s chance of getting Loans are highly difficult as the lender may not want to provide a loan or credit card to someone who has not paid dues on past loans or credit cards.

Example, If Mr. A has a Credit card which needs to be written off the total outstanding to be Written-Off (Total) is Rs 50,000 and Written-Off (Principal) is Rs 22000 then Written-Off interest is Rs 28000. In such case the Credit score of Mr. A may reduce from 800 to 680 Credit points if he has done written off (Principal)  the same might be even come to 550 Credit score if he has been written off (totally).


Settlement means the Banks or the Lender agrees to accept the payment of amount which is less than the actual due which you need to pay. In simple terms the Bank will wave off some amount from the actual due and bear certain loss to recover at least a partial amount of due from the borrower. The objective of the bank is to recover the principal amount due and cost.    

A borrower thinks that after settlement his/her Credit Score will improve drastically. Please note that it is not true. In such cases the lender may not consider the borrower’s application due to poor credit history.

Example, If Mr. X is defaulting on Car Loan of Rs.20 Lakhs Bank will charge certain penalties and interest on amount defaulted. Assuming total amount due is 22 Lakhs. As a defaulter X is not willing to pay the entire due of 22 Lakhs then the bank will offer Mr. X a settlement. Therefore, the bank may offer to settle the account for 21Lakhs. Balance 1Lakh will be waived off. This doesn’t mean he has cleared 100% dues of the bank.

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