Unless you honestly believe you can do much better, are committed to doing better, and are willing to work hard to get a better looking woman, and are willing to deal with multiple failures, then settle.
I'm in a similar boat but I'm too committed to doing better for myself and getting out of the NEET life to even feel anything towards the girl. Fuck settling, especially when it's a chubby, degenerate 5/10. I'm not really interested in her positive traits (e.g. high intelligence). I care more about morals and looks and she has neither.