Loan closed/closure: A loan is marked close when the borrower pays all the loan amount (principal amount + interest) in a timely manner without any failure.
Loan settlement: It refers to a situation of obtaining a loan from a bank or NBFC, but you are unable to make payments owing to a sickness, an injury, a loss of employment, or another reason. In this case, you notify the lender of your position and request that you be given some time off before beginning repayments. The lender may offer you a one-time personal loan settlement option in which you take some time off and then pay off the debt all at once. The credit report will reflect this loan's status as "settled" after it has been repaid in full.
Loan default: It is a situation when the borrower omits to pay the repayments of his loan amount for an unspecified period of time.
Defaulting a loan and loan settlement can drastically reduce a borrower's credit score, which further negatively impacts their future eligibility for credit. On the other hand, the closure of personal loans positively impacts the credit score.