What's the difference between Settled and Satisfied on your Credit Report?
Your Credit Report contains a huge amount of information about you, and how you’ve managed your credit agreements in the past. Different parts of your report will have a different level of influence on how you will be judged by a typical lender, but there are some entries where a small variation can have a big difference.
There are definite similarities between the Settled and Satisfied markers found on Credit Reports, and so they often get confused; and not just because the words themselves are quite similar. In some circ*mstances the two can be interchangeable, but they don’t mean exactly the same thing, and the subtle differences could mean a lot to a prospective lender.
See how different markers appear on your Credit Report
What do Settled and Satisfied mean?
Both markers indicate full payment and closure of an account, but it’s the circ*mstances that lead to this happening that cause the difference:
Settled refers to an account that has been fully paid up and then closed. This could be a loan that’s been paid off or a credit card that has been closed with no outstanding balance. These are the vast majority of accounts, and you should see these markers on any accounts you’ve closed within the last six years.
Satisfied refers to a default or CCJ that has been issued, but is fully paid off so no further attempts to reclaim money owed are required. Once a Notice of Default has been served, the borrower ceases to be a customer, instead becoming a debtor and the account will be closed automatically. As such the information on the account, such as the remaining balance, won’t be amended at all until the account is marked with a zero balance and a Satisfied marker.
What effect do they have on my score?
The terminology itself does not have an impact on your Credit Rating, but the difference between an account that has been closed voluntarily by repaying any outstanding balance and one that is forced to be closed by a lender due to a default, is significant. Even once a default or CCJ is Satisfied, your score will not improve as a result of this happening and lenders will see the presence of a default or CCJ on your report as clear evidence of you having had trouble making repayments in the past, regardless of whether they have since been paid.
Even once a debt has been satisfied, the Default or CCJ will stay on your credit file for the remainder of the six-year period.
The use of the Settled/Satisfied markers will also depend on which Credit Reference Agency is returning the account information. Equifax for instance does not use a Satisfied marker for credit accounts, even for defaulted accounts they hold – it will simply use the Settled marker once a defaulted account has been fully paid and closed. TransUnion, however, uses both markers when necessary and in line with the criteria outlined above.
What if my credit report says “Partially Satisfied?”
You may also come across a Partially Satisfied marker. These are often placed on defaulted accounts when the lender and borrower have come to an agreement for less than the full outstanding debt to be paid. Like Settled and Satisfied, Partially Satisfied indicates the closure of the account and no further payments would be expected.
CCJs cannot be partially satisfied on Credit Reports: the claimant may accept a lower settlement than the amount in the original judgment, but if the total outstanding debt is not paid, the court will simply keep it marked as Active until the entry is removed.
You can see how your own credit agreements – both open and closed – appear by checking your Credit Report. checkmyfile provides the UK’s most comprehensive Credit Report, with information from three Credit Reference Agencies, not just one. If you haven’t already, you can try checkmyfile free for 30 days, then for just £14.99 a month afterwards, which you can cancel at any time.
Updated on 13 September 2021 by Sam Griffin
FAQs
If you see 'satisfied' against any items on your credit report, it indicates that your creditor has marked a default. You may have missed several payments as previously described, but an unexpected advantage is that this entry should disappear from your credit file sooner than the 'settled' debt.
What does settled and satisfied mean on credit report? ›
A significant difference exists between these two terms: Settled – This is when you voluntarily close your account by repaying the full amount owed. Satisfied – When you repay the debt in full after the lender closes your account due to default for non-payment.
How long do satisfied accounts stay on credit report? ›
a settled debt will disappear from your credit record six years after the settlement date. a satisfied debt will disappear more quickly, as it drops off six years after the default debt.
What does it mean when a debt is satisfied? ›
Key Takeaways. Satisfaction and release states that a consumer has paid the full amount of debt that was owed to a creditor under a court judgment. A satisfaction and release prevents creditors from attempting to recover more money from the borrower or consumer.
Can you remove settled accounts from a credit report? ›
The truth is that there's no way to remove accurate information from your credit reports ahead of schedule. Whether it's missed payments or charge-offs, they'll stay on your credit reports for seven years. Fortunately, settling debt does not mean your credit will be in the gutter during those seven years.
What does settled credit accounts mean? ›
Settled refers to an account that has been fully paid up and then closed. This could be a loan that's been paid off or a credit card that has been closed with no outstanding balance. These are the vast majority of accounts, and you should see these markers on any accounts you've closed within the last six years.
How long does it take to remove settled accounts from credit report? ›
How long do settled accounts stay on your credit report? Settled accounts stay on your credit report for seven years from the date of delinquency (the date of the first late payment). The clock starts with the original date of delinquency and won't restart just because you made a payment or settled the debt.
What does your account is satisfied mean? ›
If you see 'satisfied' against any items on your credit report, it indicates that your creditor has marked a default. You may have missed several payments as previously described, but an unexpected advantage is that this entry should disappear from your credit file sooner than the 'settled' debt.
How do I remove a satisfied Judgement from my credit report? ›
Removing A Judgment from Your Record
There are only three ways in which a judgment can be made to go away: paying the debt, vacating the judgment or discharging the debt through bankruptcy.
What does it mean if a judgement is satisfied? ›
A satisfaction of judgment is a document signed by a judgment creditor and generally filed with the court, indicating that a judgment has been paid in full.
Yes, you can buy a home after debt settlement. You'll just have to meet the lender's requirements to qualify for a mortgage. Unfortunately, that could be harder after you settle debt.
How long does it take to improve credit score after debt settlement? ›
There is a high probability that you will be affected for a couple of months or even years after settling your debts. However, a debt settlement does not mean that your life needs to stop. You can begin rebuilding your credit score little by little. Your credit score will usually take between 6-24 months to improve.
Can I still use my credit card after debt settlement? ›
If a credit card account remains open after you've paid it off through debt consolidation, you can still use it. However, running up another balance could make it difficult to pay off your debt consolidation account.
What is the difference between settled and paid in full on credit report? ›
Settling an account rather than paying it in full and on time signals that you're a risky borrower, which will be reflected in your credit score. Additionally, working with a debt settlement company often means halting payments to your creditor in order to gain negotiation leverage.
Is it better to settle or pay in full? ›
Summary: Ultimately, it's better to pay off a debt in full than settle. This will look better on your credit report and help you avoid a lawsuit. If you can't afford to pay off your debt fully, debt settlement is still a good option.
Will my credit score increase after settlement? ›
Settling a debt will not increase your credit score, but it won't hurt it as much as not paying at all. For some of us, there may be a point in our lives in which we will struggle financially. Debts continue to pile up, and you may be unable to find the money to pay them off.
What does it mean when a collection is settled? ›
In a Nutshell. Debt settlement is a practice that allows you to pay a lump sum that's typically less than the amount you owe to resolve, or “settle,” your debt. It's a service that's typically offered by third-party companies that claim to reduce your debt by negotiating a settlement with your creditor.
