Loan defaults will affect your Credit Score. This includes Education Loan, Home Loan and Personal Loan. If the bank writes off your loan, that will also have a negative impact on your Credit Score. This is because banks mention how the loan was closed to credit bureaus and this is included as a remark in your credit report.
You will not be mentioned as a defaulter in your credit report if you close your loan account. However, if you pay a partial amount and your loan account is not closed, you might be listed as a defaulter. It will be better to negotiate with your bank and ask for a one-time settlement to pay off your Education Loan. This way, your Credit Score will not go down as much as it would if you were a defaulter.
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