Understanding your credit report – the difference between ‘settled’ and ‘satisfied’

When you look at your credit report, you’ll see various status codes marked against individual loans and other borrowing. These indicate the extent to which you’ve repaid your creditors, whether there were any defaults, and if the account has now been closed.

You may also have noticed that two codes sound fairly similar, and relate to debts which have been repaid – ‘settled’ and ‘satisfied.’ So what do these codes mean, and what’s the difference between them?

What does ‘settled’ mean on your credit report?

‘Settled’ means that you’ve paid your debt without default. When you miss several payments consecutively, or sometimes intermittently during the course of a loan term, for example, the lender may add a default marker to your credit report.

This is intended to warn other potential lenders that you’ve been unable to keep up with your contractual obligations, and it can have a seriously negative effect on your credit score. So seeing ‘settled’ in your credit file is a good indication that you’ve repaid in full without any adverse issues.

If you only miss an occasional payment, a creditor may not mark a default – it’s typically when two or more payments are missed that a default is recorded.

If you see a ‘partially settled’ status code, this means that your creditor has accepted an offer of final settlement that is less than the full amount owed. This does negatively affect your credit score, as it shows you have failed to pay the full amount required.

What does ‘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.

It remains for six years, but this timescale begins from the date of default rather than the date when the account is closed. If the creditor accepted an offer of final payment, i.e. less than the full amount owed, again this will be marked as ‘partially satisfied.’

As you can see, missing the occasional loan or credit card payment doesn’t automatically mean that your credit score will be affected, but any diversion from paying your debts in full can damage your ability to obtain credit and other borrowing in the future.

If you want to find out more about the status codes in your credit file, and what they mean for you in the long term, Scotland Debt Solutions can help. We work solely on behalf of Scottish residents in debt, and can arrange a free same-day meeting at any of our five offices.