IDFC FIRST Bank credit cards offer a convenient way to manage purchases, but sometimes users may find themselves struggling to repay their credit card dues. When debt grows overwhelming, credit card settlement becomes a potential solution. This option allows borrowers to negotiate with the bank to pay a reduced amount, regain financial stability, and avoid prolonged debt stress. This guide explains the IDFC FIRST Bank credit card settlement process step-by-step to empower informed decisions. 

What is Credit Card Settlement? 

Credit card settlement is an agreement between you and the bank where you pay less than the total outstanding amount to close your credit card debt. Unlike regular payments or defaults, settlement provides a legal closure on repayments. While a settlement reduces the owed amount, it impacts your credit profile by marking the account as “settled” rather than “paid in full.” Despite this, it is often a practical path for those experiencing genuine financial hardship. 

IDFC FIRST Bank Credit Card Settlement Process 

Step 1: Evaluate Your Financial Position 

Begin by assembling all relevant documents—credit card statements, income proof, expense details, and proof of financial hardship (like job loss or medical bills). Assess your total outstanding balance, including interest and penalties. Set a realistic settlement amount you can afford as a lump sum or in installments, as allowed by the bank. 

Step 2: Contact IDFC FIRST Bank 

Reach out to IDFC FIRST Bank’s credit card customer service or collections department through official helplines or by visiting a branch. Clearly communicate your intention to settle your dues due to financial difficulties. Inquire specifically about available One-Time Settlement (OTS) options and their eligibility criteria. 

Step 3: Negotiate Settlement Terms 

Prepare a comprehensive proposal explaining your financial situation and inability to pay the full amount. Present your proposed settlement sum, backing it with documents supporting your claims. Banks typically settle between 40% to 80% of the outstanding dues based on factors such as debt age and repayment potential. Stay calm and transparent during negotiations while emphasizing your willingness to resolve the debt amicably. 

Step 4: Finalize and Secure Written Agreement 

Once you and the bank agree on settlement terms, obtain a written settlement agreement. This should clearly specify the agreed payment amount, schedule, and confirm no further liability post-payment. Ensure the contract is duly signed by both parties to safeguard your interests. 

Step 5: Complete Payment and Obtain Confirmation 

Pay the settlement amount as per the agreement. After clearance, request a “No Dues Certificate” or “Settlement Letter” confirming the closure of your credit card dues. Verify that the settlement status is updated in your credit report, marking the account as settled. 

Read Also: How to improve CIBIL score after credit card settlement?

Eligibility and Offers 

IDFC FIRST Bank generally offers settlement options to customers who have defaulted on payments for over 90 days. Customers facing severe financial hardships, such as job loss or medical emergencies, are often eligible to negotiate. Settlement offers vary but typically reduce the owed amount significantly through OTS schemes or dues reduction options. The bank aims for recovery within three months of agreement or structured payments with upfront deposits. 

Negotiation Tips for a Fair Settlement 

  • Be honest and transparent about your financial hardship. 

  • Prepare a realistic budget indicating what you can afford. 

  • Use supporting documents (income proof, bills, or medical certificates) to strengthen your case. 

  • Stay professional and patient during discussions. 

  • Avoid agreeing to amounts beyond your repayment capability. 

  • Explore all reduction options, including lump sum and installment plans. 

  • Consider seeking advice from financial counselors if overwhelmed. 

Impact of IDFC FIRST Bank Credit Card Settlement on Credit Score 

Settling your IDFC FIRST Bank credit card dues can bring you temporary financial relief, but it also has a long-lasting effect on your credit score and future borrowing capacity. When you opt for settlement, the bank marks your account as “settled” instead of “closed” in your credit report. This signals to lenders that you were unable to pay your dues in full, which raises concerns about your repayment discipline. 

Here are the key impacts: 

  • Drop in Credit Score: Your score may reduce by 75–100 points or more, depending on your credit history and the outstanding amount. This makes it harder to qualify for new loans or credit cards in the short term. 

  • Negative Status in Credit Report: A “settled” remark stays on your report for up to 7 years, which can lower your chances of approval for major financial products like home loans, car loans, or premium credit cards. 

  • Reduced Loan Eligibility: Banks and NBFCs often consider a “settled” account as a red flag. Even if you meet income and age eligibility, lenders may reject your application or charge a higher interest rate. 

  • Difficulty in Availing Unsecured Credit: Since settlement indicates financial stress, getting unsecured loans such as personal loans or additional credit cards may become very challenging. 

Pro Tip: If you can, try to convert your outstanding into EMIs, restructure the dues, or clear the full balance. That way, the account can be reported as “closed” (a positive status) instead of “settled.” 

How to Improve Your Credit Score After Settlement 

Here’s how you can improve your credit score after settlement: 

1. Pay All Future Dues on Time 

Timely payments are the most effective way to rebuild credit. Make sure you pay your EMIs, utility bills, and credit card bills on or before the due date to show lenders that you’re financially responsible. 

2. Keep Your Credit Utilization Low 

If you still use a credit card, keep your spending below 30% of the credit limit. High utilization signals financial stress, while low usage shows better control over your finances. 

3. Use a Secured Credit Card 

Applying for a secured credit card (backed by a fixed deposit) can help rebuild your credit score. Responsible usage and timely payments on this card are reported to credit bureaus, gradually improving your score. 

4. Diversify Credit Responsibly 

Having a healthy mix of secured (like home or car loan) and unsecured credit (like personal loans) improves your credit profile. However, only borrow what you can comfortably repay. 

5. Monitor Your Credit Report Regularly 

Check your CIBIL™ or Experian credit report at least once every 3–6 months. This helps you track your progress and ensure that the “settled” status is accurately reported. If you later clear the remaining dues, request the bank to update the status to “closed.” 

6. Avoid Multiple Loan Applications 

Too many applications in a short time create multiple hard inquiries, which can further lower your score. Apply only when necessary and choose lenders wisely. 

7. Build Long-Term Financial Discipline 

Budget your monthly income, save consistently, and avoid over-reliance on credit cards. Strong financial habits are key to restoring and maintaining a good credit score. 

Conclusion 

Settling your IDFC FIRST Bank credit card dues is a strategic move that can help regain financial control and reduce stress. While it affects your credit score, the peace of mind and debt closure it offers can outweigh the drawbacks. Preparation, transparency, and clear communication with the bank are key to negotiating a fair settlement. Always secure written agreements and keep records of payments and correspondence. For tailored advice or assistance, professional financial counselors can offer invaluable support in this journey toward debt resolution.

Frequently Asked Questions (FAQs) 

1. Can settlement be done in installments? 

Generally, IDFC FIRST Bank prefers one-time payments for settlement, but in some cases, structured installment plans may be allowed with upfront deposits. 

2. What documents are needed for settlement? 

You will need credit card statements, income proof, expense records, and any documents supporting financial hardship. 

3. How long does the settlement process take? 

The entire process, from negotiation to payment confirmation, can take 30 to 60 days depending on processing and communication. 

4. Will settlement affect my credit score? 

Yes, your credit report will show a settled status, which negatively impacts your credit score but is better than a default. 

5. Should I get a No Dues Certificate? 

Yes, always request a No Dues Certificate or Settlement Letter to have documented proof of closure and avoid future disputes.