A credit report contains a detailed picture of your past borrowing habits and repayment history. Your CIBIL report allows lenders to assess your creditworthiness and indicates how reliable you can be with your loan repayments.
Among the various details in your credit report, LSS is one acronym that stands out.
While settling a debt might seem like a way out, an LSS remark on your CIBIL report carries significant weight, impacting your credit score and future borrowing prospects.
This article provides the LSS meaning in CIBIL, why it is important, and how to navigate the financial landscape after an LSS remark.
Learn More About: What is DPD Full Form in Banking or CIBIL Report?
LSS in a CIBIL report stands for "Lender Settled Status".
It shows that the borrower has settled a credit account with the lender for a lower amount, through negotiations.
In case the borrower is unable to repay the loan amount fully, then they can reach an agreement with the lender to pay a smaller amount to close the loan account.
This could be due to various reasons, ranging from financial hardship to disputes with the lender.
LSS can have a negative impact on your future borrowing prospects. There are two main aspects to understanding the importance of LSS. They are:
LSS is a negative comment on your CIBIL report. It implies that you have failed to fully meet your financial responsibilities, which is a cause for concern for the lenders.
The impact it can have on your score is determined by several criteria, including the settled amount, the time it took to settle, and your credit history. However, an LSS mark can lower your score, making acquiring loans or negotiating favorable terms more difficult irrespective of the criteria.
Additionally, an LSS remark is not temporary. It stays on your CIBIL report for seven years. This means it continues to affect your creditworthiness for a long time, potentially restricting your financial plans during that time.
LSS can have a drastic impact on your financial future. However, there are times when LSS can help save your present.
LSS is mostly preferred by borrowers who choose to settle due to unforeseen circumstances. Job loss, medical difficulties, and natural disasters can all cause financial distress. While settling a debt in such circumstances is not ideal, it may be the only practical choice.
However, not all LSS cases are equal. A skillfully negotiated settlement can help minimize your outstanding amount and protect your credit score to some extent.
You can also discuss potential solutions with the lender, such as seeking a letter of explanation that describes the circumstances around the settlement. This letter can be included with your CIBIL report to provide context for future lenders.
While an LSS mark on your CIBIL report can be unsettling, you can follow a few measures to mitigate the impact it has on your finances. Here are some steps you can take:
Obtain your detailed CIBIL report: Understand the specifics of the LSS remark, including the settled amount, date, and lender.
Review your settlement agreement: Ensure you understand the terms in the settlement agreement and are in your favor. Make sure you're comfortable with the repayment schedule.
Maintain a Good Credit Profile: Make timely payments on all your other credit accounts. This shows responsible borrowing behavior from you and can help you reduce the negative impact of LSS.
Reduce your debt: Focus on paying down existing debts to improve your debt-to-income ratio. The DTI ratio is another crucial factor in your credit score.
Wait it out: After seven years, the LSS remark will automatically disappear from your CIBIL report, restoring your creditworthiness in the eyes of lenders.
Having an open dialogue with your lender about your financial situation is essential. It can give them an idea about your repayment capacity and at times, help reduce the interest rates. Moreover, appropriate financial behavior helps in mitigating the impact of an LSS notice and makes way for a financially sound future.
An LSS remark might slow down your credit journey, but it's not the end of the road. In the long run, navigating this challenge and maintaining responsible financial habits will help you emerge with a stronger credit score. Keep in mind that financial well-being comes from good financial habits cultivated over time and does not happen overnight. So, make informed decisions, and prioritize responsible borrowing practices.
LSS stands for 'Lender Settled Status.' LSS means that you have settled the loan by paying a minimum amount after negotiating with the lender instead of the complete amount. While settling your debt might seem positive, it's viewed negatively on your CIBIL report.
LSS significantly lowers your credit score. Since loan settling means that you have not repaid the loan, it will make it harder for you to get loans in the future.
No, LSS remarks remain on your CIBIL report for seven years from the date of settlement. However, if you believe the information is inaccurate, you can dispute it with CIBIL.
Lenders don’t have the authority to remove the LSS remark from your report. They report the settlement to CIBIL which updates the CIBIL report to reflect the same.
Not necessarily. While getting certain loans like a personal loan or a credit card might be difficult with an LSS remark, some lenders might still consider your application based on other factors like your income, employment stability, and overall debt-to-income ratio.
Thank you. Your feedback is important to us.
