Debt Camel

Answers to questions about debts and credit ratings - in plain English!

How F&F settlements affect credit ratings

A reader has asked how Full & Final settlements (F&Fs) would affect her credit rating which is currently looking good as her debts were all defaulted and have dropped off her credit record.

A full and final settlement happens when the creditors agrees to accept an amount which is less that the total owed to settle a debt, and agrees that the debtor will not be pursued for the remainder.  For more details, see this Guide to Full & Final settlements.

This article looks at how F&Fs are shown on a credit record in the two different situations:

  • where the debts are still showing on your credit record, and
  • where the debts have already disappeared.Woman reading her credit report and worried about a how a partial settlement will affect it

Some different names for this

F&F settlements are often called partial settlements, because you don’t pay the full amount, only part of it.

Creditors usually mark the debt as partially settled on your credit record rather than settled.

If the debt has previously defaulted, the term settled is not used and the term satisfied is used instead. A F&F settlement on a defaulted debt is then marked as partially satisfied. I talk here about settled debts because that is is how creditors normally talk to you, even though the credit record term is normally satisfied.

Debts that still show on your credit record

When you settle debt, partially or in full, the balance is set to zero. The debt will then disappear from your credit record six years after the original default date.

If the debt hasn’t defaulted, it will disappear six years after the settlement date. But it is unusual for a creditor to accept a F&F unless a debt has defaulted. You may want to ask for a default to be added, see What should the default date for a debt be? for more about this.

It is common for a creditor to tell you that the debt will stay for six years from the settlement date. This isn’t right if there is a default date on the record. It will drop off six years from the default date whatever you do.

How does a partial settlement affect your credit rating?

Your credit score is a complicated calculation looking at lots of different factors – but a partial settlement marker isn’t usually one of them at all, as James Jones from Experian explains. But lenders may make additional checks before deciding whether to give you credit. This is more likely for larger credit applications – mortgage or car finance say.

Some lenders may not care if you have partially settled a debt.  And some lenders will reject you even if you have fully settled the debt. So it can be hard to decide if paying the extra money is worth it.

Think about the size of the discount you can get and how long the debt will stay on your credit record. For example:

  • if the creditor will accept £500 to settle a £1,500 debt that is a big discount. And if the debt will drop off in the next year, it’s probably a good idea to grab it!
  • if the creditors will only accept £1,300 to settle that £1,500 and the debt is still going to show for another four years, you may think it’s worth paying more to get the debt marked as fully settled.

The rest of your financial position also matters:

  • with lots of problems on your credit record, getting one debt marked as partially or fully settled probably won’t make much difference at all;
  • if you can’t afford to repay all your problem debts, it’s usually better to settle as many as possible partially, rather than take longer to repay them in full.

Wanting a mortgage is the most difficult situation – I look at it in detail in Will partial settlement make getting a mortgage harder?

Debts that have disappeared from your credit record

A defaulted debt drops off your credit file after 6 years, which is why the questioner is no longer seeing these old debts on her record. But would settling one bring back the debt?  You can see why she wouldn’t want her new, clean credit record spoiled by having some partial settlement indicators added to it…

The answer is simple – after a defaulted debt has gone from a credit record, it will never re-appear. You can offer a F&F settlement on these debts and not risk them coming back and damaging your credit score. If a creditor tells you that a partial settlement will be shown on your credit record for another six years, they are wrong.

This also applies to CCJs that have dropped off after 6 years. They will not reappear if you settle them with a partial settlement.

Once a debt with a default or a CCJ has gone, the only lender that will know about it the original creditor. So don’t make the mistake of applying for a mortgage to NatWest if you originally defaulted to RBS, or to Halifax if you defaulted on a Lloyds debt.

Why offer a F&F if the debts have disappeared?

You might wonder why the questioner would bother making Full and Final offers on debts which have disappeared from a credit record. There are two reasons why trying to settle old debts is a good idea:

  1. a debt that isn’t showing on your credit record still exists. Unless it is statute-barred the creditor can still chase you for the money. See Do I still have to pay a debt which isn’t on my credit record? for more details.
  2. if you apply for a mortgage or a re-mortgage the lender is likely to ask about all your debts, not just check your credit record.

So as defaulted old debts can often be settled for low Full and Final offers, it makes a lot of sense for the questioner to try to deal with hers.

This article was originally published in 2014. It has been updated with new examples and links.

More Debt Camel articles:

Getting settlements on old debts

Not heard from a debt collector for years?

Not heard from a debt collector for years?

Improve your credit score for a mortgage

Comments

  1. Hello, just need some help on the following, we currently have debts that are in a DMP company and we have recently gone direct to the companies involved who have our debts. We wrote to cabot asking for F&F on about 6 accounts some they have discounted some they haven’t.
    I have been told the ones they haven’t reduced is because there was a ‘pre default’ on the account before they took over but there has been none since and we have been paying now for approximately 8years. Trying to get ourselves sorted and now we will not be able to do so :0(

    Is it common practise that these companies do not reduce debts because of this reason?

    Thank you.

    Reply

    • can you give some details about the original debts – what type of debt, who from, when did the account start?

      do these debts show on your credit record?

      Reply

  2. The original debts came from various credit cards/loans we now pay a monthly amount to Cabot through a debt agency. An arrangement does show on my husbands credit report from Cabot but they only put it on there in the last 6months which is odd as we have been paying them for years! The debts started 8 years ago. Thank you

    Reply

  3. Hi,
    I have a default on my account by shop direct for £2961, but the default balance is £1984. This was added on 26/6/2013.
    This debt goes back to 2006, but I only checked my credit record last year and I have found a letter with default date back to 2012.
    Iv requested a signed credit agreement several times, but nothing was found and in 2013 lowells contacted me to say the account had been passed back to shopdirect and closed cause no signed credit agreement was located.
    I have been reading on internet (legalbeadles) that people have been taken to court , even with no signed credit agreement and lost and received a ccj, I don’t want this to happen .
    Should I contact them regarding full and final settlement and if so how much should I offer. I’m having sleepless nights over this.
    I definitely can’t afford the full amount , but if I have some idea off what to offer I can try and raise that amount. And what amount do I work on, the debt amount £2961 or the default amount £1984. I really need closure in this as I’m going through a difficult break up and these arrears are stressing me out.
    And also what do I put in the letter so they can’t come back to me in future?

    Reply

    • If they couldn’t find the paperwork for the account in 2013, I don’t think you have anything to worry about. You could call National Debtline 0808 808 4000 to confirm this. I don’t know what Legal Beagles case you are referring to but no CCA agreement is an excellent defence. Also the fact it has gone quiet for 4 years means the creditor doesn’t think they would win either.

      Reply

      • Iv phoned national debt line and they said don’t worry, but it’s just stressing me out so much . The default letter I have is for Jan 2012 and they added a new default in July 2013, so this is about 1 1/2 years extra I have to wait to get it off credit file . I just thought if I off F&F and request they go back to date Jan 2012 my credit file will be sorted by Jan next year.

        Reply

        • Well it’s your decision if you want to offer a f&F settlement – but you absolutely shouldn’t be thinking of borrowing the money to do this.

          If you really want to do this , I would suggest making it a VERY low one as this debt appears to be unenforceable. I would be thinking £100. Point out in your letter that they are unable to produce the CCA documentation so the debt is unenforceable. And say your offer is conditional on them agreeing to correct the default date to Jan 12 as per the letter you have, attach a copy of it.

          Reply

  4. I have been with a debt management company for 9 years and recently I wanted to settle my debts so asked them for a settlement figure from my creditors…they came back with a figure which I duely paid… they have now come back to me a couple of months later saying that the creditors want more money…the people From the debt management company that we’re dealing with my account have left the company so I was wondering what rights I have or don’t have against paying the extra money ?….

    Reply

      • The company is called Moneyplus Group….. I’ve had no written information from them it was all done over the phone

        Reply

        • If you think your phone calls were clear that you wanted to offer the money in a full and final settlement, then you should put in a formal complaint to Moneyplus, email is good complaints@moneyplus.com. They will still have the phone recordings.

          Reply

      • I can’t tell if the creditors have a right to ask for this – they may have agreed to a F&F and be trying it on.

        Or Moneyplus may have not explained the full legal situation to you – in which case you could ask for compensation.

        Or Moneyplus could have been negligent in not asking for confirmation from the creditors that this was being accepted as a full & final settlement.

        Legally there is also a different situation if the settlement money was coming from a third party – a relative say – and not from you.

        Reply

  5. Help please! I have offered to settle my Iva, I have offered 2720 I have 20 months left paying 134 pm, I have received a letter saying my Iva company (Harrington brooks) will be taking my offer to my creditors in 6 weeks 14th July (I made the settlement offer on the 21st April), but are charging £500 for an early settlement fee and £400 for a variation meeting? WHAT!! Is this correct? An extra £900 ? Can they do this? What happens if my creditors say no? I’m lucky that my partner has offered as a gift to settle the debt let alone an extra £900? Thanks

    Reply

    • I don’t think you will be asked to pay these fees, they will be deducted from the money your creditors get. And I think the early settlement fee replaces some of the fee they would be charging for the rest of your IVA, it’s not an entirely new fee. Ask HB and they will confirm this.

      If your creditors says know, then you can use the money from your partner to make the monthly payments. It won’t make a lot of difference to you probably – an early settlement doesn’t remove the IVA from your credit rating, it is there for the full 6 years.

      Reply

  6. Hi Sara,

    We are approx 18k in debt with an active DMP. We are due to complete on our house sale next week and are going into rented accommodation for 12 – 24 months to try and rebuild our credit a bit.

    We have defaulted on 21 of the 26 credit accounts we have and most of these defaults date back to 2012/13. Would it make a massive impact on our credit rating (418 and 512 with Noddle) if we make F&F offers? Ideally would like to clear all debts for 10 – 12k if possible.

    Thanks.

    Reply

    • F&F offers won’t directly reduce your credi score, but they may make some lenders less prepared to lend to you, especially mortgage lenders. See https://debtcamel.co.uk/dmp-partial-settlement/ for more about partial settlements and looking towards getting a mortgage.

      In your case, it sounds as though all the defaulted accounts will have disappeared from your credit record in 2018/19. If you stay renting until these have gone no-one (except the creditors with the defaulted accounts!) will ever know that you partially settled them.

      Reply

  7. I was trying to figure out something with F&Finals. We are on a DMP (have been for four years), many of our debts were owing to HSBC and Lloyds bank, and are thinking about doing F&F’s, but are hesitant because we wish to get a mortgage (in 3 or so years, when the defaulted debts fall away and we have had time to save in our new debt free lives -woohoo!). Our only reservation is, if we do a F&F and it falls away from our credit score as it should after six years, would we affect our chances of getting an mortgage with either of these banks/ their sister companies as they will have their own records/ history with us. Or does this also get shredded after six years too. We would prefer to have as many doors open as possible when it does come time to get a mortgage and would be helpful to know if doing F&F’s will affect us in this respect. Thanks for you help!

    Reply

      • In your situation, I would probably go for F&Fs for four reasons:

        – you will have more money for a deposit
        – there are plenty more places to get mortgages form, ruling out HSBC & Lloyds is not really a problem.
        – you should try to avoid applying to anyone you have previously defaulted to. Whether you settled the debt fully or partically makes less difference that the fact you defaulted!
        – if the debts have been sold to a debt collector, the original creditor will have no idea how you settled the debt.

        Reply

        • I find this is a very good point: – you should try to avoid applying to anyone you have previously defaulted to. Whether you settled the debt fully or partically makes less difference that the fact you defaulted!

          I never really saw it this way, but you are right the prejudice from these creditors will already be there in the form of a default should they choose to scour their own records, in which case how the debt is settled is neither here nor there as their background on us has already set the outcome and there is no ‘changing their perspective of us’. No point in being a martyr about it.

          Thank you as always!

          Reply

  8. Please i need advice please, i owe Lloyd bank £2400 from November 2012 and the account as been transfer to Lowell group because i default payment but i have an agreement to by £60 monthly have paid £500 so far but have been offer an agreement to pay part payment of £900 for them to clear my debt as partial payment. is it a good deal ? if yes is it going to affect my rating in future for mortgage or loan.?

    Reply

    • If you currently owe 2400 then an offer to settle for 900 isn’t bad. Can you afford this much?

      Has this debt been marked as defaulted? What sort if debt was it, and when was the account opened?

      Reply

      • I would say it is a good deal and pay that amount to clear it and then thats one less thing to worry about. It drops off your credit file from the date you defaulted from. Hope this helps

        Reply

  9. Hi I have one default on my credit file for £999 to NatWest it was put on there in may 2013. It is the only default I have on my file, I have never heard from them or had them contact me in all these years but this one mark is holding me back and I am looking to get a mortgage as soon as I can clear it. What shall I do with this? I contacted eqifax and they have spoken to NatWest and said it’s unsettled and they can’t remove it until 6 years is up or I pay the amount in full or at a discount rate. But will paying a lower rate affect my score when applying for a mortgage as it might show at part settled… am I correct? What’s the best thing I can do? Thank you Ash

    Reply

    • Is this debt yours? If it isn’t you should challenge it.

      Assuming it is your debt, then you need to settle it. Whether paying a lower amount will matter if you want a mortgage is a difficult questions, see https://debtcamel.co.uk/dmp-partial-settlement/ which looks at this exact issue.

      You should also do this asap as most mortgage companies will not consider you for a mortgage unless all your defaults were settled more than a year ago.

      Reply

  10. I have a partially settled debt on my credit report which is worrying me as im now applying for a mortgage. The debt was originally with cap one and was for £800 defaulted in 2013 and settled 2016 with cabot. Just wondered if this would be a problem when it comes to my mortgage application. Thanks for your help.

    Reply

    • A rule of thumb is that there are some high street lenders who don’t mind a default provided it is over 3 years old and was settled more than 12 months ago. But go through a broker, not direct to a lender.

      Reply

  11. Hey Sara

    I understand your post but just want clarification.

    Santander – I defaulted Aug 2011, I settled at a reduced amount in Sept 2016. I paid in one full go. It’s cleared off my defaults but is in closed account and shows satisfied. Should this be removed or will it stay on till 2022? Will this record affect credit applications?

    Hoist – I also had another debt from Aug 2011, I cleared it by monthly installments and paid my last one Jan 2017. I arranged this in Sept 2016 so the report shows settled in Sept 2016. How does this affect me?

    I’ve noticed that the Santander one shows green from the day of default.. But Hoist shows red all the way till Sept.

    You said Settled and Satisfied are interchangeable,is that the case here?

    Do I need to get these two records removed?

    Reply

    • is a default date showing on the Santander record? the Hoist record? for the Hoist record, who was the original debt with and what does that show?

      what credit report are you looking at?

      Reply

      • I’m looking at Noddle,

        For Santander, I can see

        Account start date
        10/12/2008
        Account end date
        11/04/2016
        Payment start date
        10/12/2008

        For Hoist I can see

        Account start date
        08/10/2008
        Account end date
        01/09/2016
        Opening balance
        £ 749
        Repayment frequency
        Monthly
        Date of default
        22/09/2011
        Default balance
        £ 749

        Seems like a difference due to the payment in full and monthly?

        The Hoist one is actually a HSBC account. But Hoist were managing both. When I paid the Santander one in full they pulled me up on this one so I set up the DD. Surprised the Santander one doesn’t say Santander.

        Also say in 5 years I approach these banks. Will they know I was once in serious debt with them?

        Reply

  12. I have defaulted joint debts with my ex husband (joint mortgage 8000 in defaulted 2013 and unsecured loan 2100 – defaulted in sept 2017 – not sure why so late as all debts was not paid since the same time 2013) there were originally 3 but I paid of the other one. The debt company that bought the 8000k suggested me to partially settled the debt for my behalf and said what ever is left will be chased to my ex. As far as I know joint debts is you a are liable for the full amount? They said they will do a letter that said I have partially settled and debt charity confirmed that, even if they take me to court for the rest, they wont win as that’s the same as fraud. Advice?

    Reply

  13. Hi, I have 4 creditors (2 loans and 2 credit cards). I have defaulted in the last year on both credit cards and one of the loans. I am up to date with the other loan. I have just sold my house and due to complete soon. I will be in the position following the house sale to partially settle at least one of the 3 defaulted amounts and depending on what figure they accept, possibly 2 of the defaulted debts. Its highly unlikely I will be able to clear all 3 of the defaulted debts. I am intending to continue with the ‘good debt’ that I have as I hope continuing to stay up to date with this loan will help repair my credit rating which has taken quite a savaging. Is it worthwhile partially settling the other defaulted debts at this stage and what effect will that have on my current credit score and the direction it takes in the near future? I currently have arrangements with each of the 3 defaulted debts, repaying a small amount each month.
    thanks
    Andy

    Reply

    • Carrying on paying the undefaulted loan normally is a good idea – this will stay on your credit record, looking good, from 6 years from the point it is paid off.

      How large are the defaulted balances? How long ago were the defaults? How much to you hope to have after all your sale & moving costs?

      Reply

  14. Hi Sara
    I have an old debt that has come off the credit report, (over 6 years old) I haven’t Paid anything for about a year and haven’t heard anything from them. it used to be called welcome finance and they sold the debt as I think they went into administration. does this debt still stand?
    if I pay the full and final settlement to the debt collection agency it will not go back on my credit report as settled will it?

    thanks

    Reply

    • The debt is still legally due, not to the debt collection agency. It can’t be statute barred as you have been making payments to it within the last 6 years.

      If you settle this debt with a F&F, it will not reappear on your credit rating.

      Reply

  15. Good afternoon, my husband and I started a DAS IVA in January 2011 and after selling our home at the start of the year we managed to pay off my husband’s (his being the larger amount). This was completely paid off at the start of October and they advised they would update the register. My question is 1 the IVA is still showing on his file 2 it is showing January 2012 not January 2011 as the start date so is there a reason it is dated wrong? The DAS use Thinklink as there distributer and neither of them can give us any answers.

    Thanks.

    Reply

  16. Hello. I was made bankrupt in May 2012 and discharged in May 2013. All of my credit accounts entered default status around the time of my bankruptcy, apart from my mortgage with Santander. My mortgage was never entered I to default and I’m unsure why? Having looked at both my Experian and Equifax credit reports I can see the following information :

    Start Balance- £0
    Default / Delinquent Balance- £0
    Date Satisfied- 28/04/14
    Status- Settled

    Are you able to shed any light why this should be, or give me any pointers, so that when I contact Santander I can atleast have an idea what to say to them?

    Reply

    • If there is nothing negative on your mortgage record, you should leave it as it is, not ask for a default to be added!

      Reply

  17. Sara, many thanks for your sound advice. I will provide you with a little more information about this. Looking at the payment history of the report it shops an AP at point of bankruptcy in 2012. Thereafter, it shows some 1’s for various months as well as the odd payment I made. It then shows 2’s, 3’s, 4’s, 5’s, and 6’s for the whole of 2013. In 2014 it shows 6’s for January and February, green in March and S in April. There is no other information for the rest of 2014 to date.

    Should I still follow your original advice, or do something different? Thank you.

    Reply

      • Thank you Sara. I followed the advice in the link you provided and contacted Santander. I spoke to a very sympathetic agent who agreed that a default should have been applied, especially due to the number of missed payments back in 2012. She has opened a complaint and hopes to get this resolved for me with a default date of May 2012. I sincerely hope they follow through with this. Thanks again.

        Reply

  18. Hi Sara,
    I made an irresponsible lending complaint about a loan I have with 118 money last year,it went to the ombudsman and they never upheld,so obviously I have accepted and carried on with the payments,the halfway period on the loan has just passed and if it goes full term I will have to pay £1579 over the next 12 months,i have asked for an early settlement figure this morning,and the figureI was quoted was £1298 which hardly seems fair,paying off a loan 12 months early and only making a paltry saving,do I have grounds for complaint or I have basically agreed to these terms when I signed up for the loan,and are stuck with it?

    Reply

    • You could ask for details of how they have calculated this and also for a copy of your loan T&Cs if you don’t have them. The calculation (including any extra charges) will be set out in the T&Cs. The figure may well be right.
      NB it’s nearly £300 off – worth having!

      Reply

  19. Hi Sara,

    I’ve been in a DMP since 2008 and have recently been given money by my parents to settle me debts. I have settled the smaller ones fully and have noticed that this has had a beneficial effect on my credit rating even though none of the debts were still showing on my credit report. I have two larger debts of £9k and & £4K (neither of which show in my credit report) that I ideally would like to do a F&F settlement for. I’m confused because in your article it says that where a debt doesn’t show on your credit report neither will a partial settlement and yet my 0 balances have been reported (with positive effect on improving my credit rating) even though they no longer showed on my credit report. I’m working hard to repair my credit rating so that we can apply for a mortgage in a year or so and have managed to get into ‘fair’ so I don’t want anything to adversely effect this.

    Also on a side note, I had a credit card with co op that they chose to close because I didn’t use it. There was nothing owing on it. But I see that it shows on my credit report recently as having money owing and as me making a late payment. The credit card account was closed about 3 1/2 years ago.

    Reply

    • Are you saying the settled debts have reappeared on your credit record? Is there a default date showing for them?

      The co op card you need to complain and ask for this error to be removed.

      Reply

    • No the settled debts have not reappeared, they don’t show at all but since I’ve paid them my credit score has improved and the person who took payment said they would be reported as settled. Am I wrongly assuming that this was what was responsible for improving my score?

      Reply

      • “Am I wrongly assuming that this was what was responsible for improving my score?”

        Yes, that is wrong. What is not on your credit record – these settled debts – has ZERO affect on your credit score. So settle those other debts for as small an amount as posssible!

        Reply

  20. Hi everyone,

    I’m in need of help. I have been financially suffering these last four months, due to a salary decrease. I have paid all my other monthly commitments apart from one my HSBC loan. This is due to it being my largest monthly commitment. To cut along story short Hsbc have offered a settlement of half the debt, saying if I accept this will put down as a partial settlement and they will close all my account with them. I’ve tried to get advice on how bad this will affect me on my credit report and will I be able to get a mortgage within the next year with my partner? Some say this “partial settlement” on your report will cause most lenders to avoid me, some say it won’t really affecf me and then others say no way will I be able to get a mortgage. Can you help? I don’t want to accept anything till I know how this will affect me.

    Reply

    • You probably already have late payment or default markers on this loan on your credit record. Because of these you will not be able to get a mortgage until after the debt is settled – and even then you will probably have to wait a year.

      So the question isn’t really how mortgage lenders view a partial settlement – it’s whether you have any better options? If you can’t afford to repay the debt in full, then a partial settlement now is going to be a lot better than anything else, as to a mortgage lender it will show that from this point, you don’t have any financial problems. Only making monthly payments or, worse, ignoring it is going to be much worse for a mortgage application in the next 5 or 6 years.

      Some mortgage lenders will care less than other ones about a partial settlement. A sensible approach would be to settle the debt now (I am assuming you have the money for this settlement?), wait a year and then talk to a mortgage broker. Do not apply directly to a mortgage lender and, of course, don’t even think of applying to HSBC!

      Reply

  21. Hi
    Can anyone help? I have been making F&F offers to a number of debts that I have had for some years (all in excess of 6 years). Nothing is showing on my credit report (except my mortgage). I have just paid LINK a partial settlement for a Barclays loan (Paid £4k on a £5k loan). Link have told me this will show on my record. I have never seen a default from Barclays, although it was showing as ‘Arrangement’ or something like that for a few years. It has now disappeared altogether from my report. Can LINK put this back onto my Credit File showing as partially settled even though its not been showing for a while?
    Thank you in advance for your help.

    Reply

  22. One of my creditors removed a default from my credit file early (still had 4 years before it dropped off).

    I settled the debt about a month before it was removed, I expected the default to be marked as satisfied but it disappeared instead.

    I’m not complaining that it’s gone as I’ve been working hard to improve my creditworthiness as I would like to buy a home at some point in the future. Just out of curiosity, what effect does a default being removed early have on a credit file and creditworthiness? Is there a possibility that the default could reappear at some time in the future?

    Reply

    • “what effect does a default being removed early have on a credit file and creditworthiness?” It can only help!

      “Is there a possibility that the default could reappear at some time in the future?” I don’t know. It doesn’t sound as though it should have gone, so it may have been an error?

      Reply

  23. Hello,
    I am hoping for some advice on full and final offers.
    We (myself and my boyfriend) are hoping to be able to pay off our debts early (within the next six months). We have been on a DMP since 2013.
    But are unsure on who to make our F&Final offers to. We seem to have accrued the same debt collection agencies for our accounts, but are not sure whether it is wise to approach these managing credit agencies or the original creditor? Debts listed below:
    Cabot Financial (Europe) Ltd- Originally: Hitachi £219.94
    Cabot Financial (Europe) Ltd -Originally: HSBC £505.70
    Cabot Financial (Europe) Ltd -Originally: HSBC £566.59
    Wescot Credit Services – Originally: Lloyds £481.71
    Wescot Credit Services – Originally: Lloyds £996.21
    Wescot Credit Services – Originally: Lloyds £1,511.57
    Wescot Credit Services – Originally: Lloyds £790.37

    Do Westcot and Cabot have the authority to accept a F&Finals as I believe the debts are managed, not purchased by these agencies. Along with this is it okay to send a collective F&F offer or should we do so for each individual account. All debts defaulted in either 2013 or 2014.

    Thank you for your insight!

    Reply

    • Along with this we would like to ask if you have any advice on how much % we should be offering?
      We have made regular payment to our DMP without issue (£152 per month) and have been doing so since 2013. I imagine they will likely consider this when looking on whether to accept a F&F or to wait it out on the DMP payments? So not sure what a good starting point would be? We see some contradictory advice online about what is a good starting point.

      Reply

      • Well you have c 5k of debt and you are paying £1800 a year to it. So they aren’t likely to accept a low offer as they will get the full amount in under 3 years.

        Reply

    • The debt collectors will normally have authority to accept/decline a F&F. It’s best to make the same offer (60% or whatever) to all your creditors and tell each what you are offering the others.

      Reply

      • Thank you for your clarity and help! It can be confusing with all the contradictory messages. If we tell all creditors same thing / clear about offers to other creditors is this more likely to assist an acceptance? I was wondering if it would leave creditors thinking there is more (overall) cash then we are offering them (individually) and that they could push for more? Just wondering what your thinking is behind giving creditors full visibility with the f&f offers? Thank you Sara!

        Reply

  24. I have 2 defaults on my account that are currently affecting my score from 2014, currently paying £1 a month token payment on them but would it be worth me asking for a full and final settlement figure or would this hurt my credit score even more? Both are quite low amounts £190 & £210 and I have been paying £1 a month for 4 years+ so I’m wondering what they would likely accept. Failing this I’ve heard that you can write to the company that gave the default and asked for it to be removed, would this be possible? Thanks

    Reply

  25. Hi,
    Can anyone help me. I’m looking at making full and final settlement offers on my accounts. What’s the lowest reasonable offer that can be made? I’ve had most of these debts for nearly six year and for about the last three I’ve been making £1 a month as all I can afford. My parents are going to help me but would like to have an idea of how much. My debt totals around £10000. Any ideas on a percentage to calculate a full and final settlement on each would be great.

    Reply

  26. Hello Sara

    I just wanted to give you and update to see if there is any further advice you could give me. In the end I got nowhere with Santander. They refused to enter a default on my account. I took my case to the Financial Ombudsman and they just got back to me with a response:

    “The credit report shows the mortgage account with Santander as settled on 28 April 2014, instead of defaulted when the complainant entered bankruptcy in 2012. A £0.00 balance was reached on 28 April 2014, and this is the date Santander has recorded the account ‘settled’ on the complainants file. The credit report shows the highest status Santander recorded on the account was ‘6’, meaning at least 6 payments were outstanding when the account was settled. As explained above it’s not inaccurate for Santander to record the account as settled. Santander has let me know they’d only record a mortgage account as defaulted if they’d have
    started repossession of the property. Having considered the information Santander has provided, I think the information they’ve recorded on the complainants credit record is an accurate reflection of what happened. Because of this, I won’t be asking Santander to do anything differently”.

    Reply

    • I replied the Ombudsman to tell them I’m unhappy with the decision, I believe they are looking at the case again. The Ombudsman said that a default would place me in a worse position than I am at the moment. This is strictly not true because if my account was defaulted it would by now have dropped from my credit file.

      As it stands I have no idea when this account will drop from my credit file. Do you have any advice?

      Thank you.

      Reply

      • Well the points that you need to make are that your mortgage debt was included in your bankruptcy and that your very patchy payment record shows that no effective arrangement to pay was in place in 2012 or 2013, so the credit record is inaccurate and misleading.

        Reply

        • Thank you Sara. I will drop another email to the Ombudsman to make this information clear. Not sure why this information wasn’t obvious to the Ombudsman when I supplied them with all my records. Thanks.

          Reply

  27. Hi Sarah,
    We (myself and boyfriend) partially settled some old (about 5yrs) debts with Lloyds (via Westcot). The wording on their letters to settle were as such. ‘Please not your payment of of a partial settlement will result in the account being recorded as ‘partially settled’ on your credit file. This information will remain on your credit file for 6 years from the date of default. If you are in a position to repay the full balance your credit file will be recorded as fully satisfied for this account. ‘
    Looking at our credit files (about 2 months since settling) they have lowered the balances but have not marked our file as partially settled either and the accounts are still open. We are growing concerned they are not going to zero our balances and would appreciate your insight on the following:

    1. Do they have to zero balances to mark as partially settled or ‘should’ they?
    2. If they do not zero the balances will it matter as these defaults will fall away in the next year (i.e: off our file)
    3. We are hoping to get a mortgage (in about 2yrs when credit files have cleared from defaults from creditors plus some time to save for a deposit), how will this affect things if they do not zero balance?
    4. Can we complain to them to nil the balance and mark as partially satisfied and close the accounts?

    Thank you so much for your help! I do feel something is a bit amiss as hey recently ‘updated’ our files but only the balances to what we have paid.

    Lou

    Reply

  28. Hi I’m in need of some advice please. To cut a long story short I’m in 21k of debt between 3 credit cards and a personal unsecured loan. Through divorce, house sale and purchase and a criminal law solicitor due to my ex husband. This has accumulated in the last 3 years and I am now struggling to pay off the debt. I pay over £550 in debt a month and never missed a payment. I have a mortgage and have 70k equity in the house but I’m on a five year fixed rate mortgage, so can’t touch it at present. I’ve looked at a secured loan to consolidate the debt and reduce my monthly payment amount but the interest and broker rates are expensive. I’m a single mum and only work 3 days a week. Can you advise on what the best course of action is here to reduce my monthly payment for the debt please. Thank you

    Reply

    • Don’t get a secured loan at a poor rate of interest is my advice! These loans have variable rates, they could go up next year, your house could then be at risk.

      Will you be able to work more days in a few years?

      Reply

      • Hi yes I will be able to go back to working full time hopefully middle of next year. Do you have any advice on what I could do to reduce the debt repayments as it leaves my with nothing to live off. Thank you

        Reply

        • In that case you could look at a debt management plan as a temporary solution, just until your income goes up. The downside of a debt management is that it harms your credit record and will make it hard to remortgage at the end of your mortgage fix. But talk to StepChange https://www.stepchange.org/ and see what they say about a DMP and about your other options.

          Reply

  29. Hi Sarah,

    Just had a full and final (partial) accepted my MBNA, they said they will not send paperwork to confirm this agreement until payment is made, but the agreement exists? Is this correct. They also mentioned that the debt could be sold at any moment and the offer is valid for a short period of time.

    Is this normal procuedure for defaulted debts and acceptance of settlement? Im worried they might mug me off and sell my debts of after our agreement

    Reply

    • Hi Sarah,

      Just an update i got them to confirm on the phone that the debt is settled, cannot be recovered in the future by anyone at MBNA or externally. I settled this morning and they will send me a letter in the next few days to confirm.

      I asked for call to be recorded and this settlement will be marked partially settled and stay for 6 years

      Reply

  30. Hi, hope someone can help. I intend to make a final settlement payment on two debts. both will be partial. one has a default that will expire in two years, the other has no defaults and currently doesnt show on my credit report. by making partial payments on both, will this negatively affect my credit score when i re-apply for a mortgage in two years time. many thanks. Geoff

    Reply

  31. Hi Sara,
    Just had a good read about your article and I believe you could offer me some help as I have found the article to be very useful. Well my situation os a bit of a bother. I have two accounts recorded as defaults by the same company August 2014. One has a balance of just over 2000 and the other 1300. Now from the start I have always argued that I never defaulted as I was still actively making payments on the accounts. Account incurred compound interest at 49% APR on Buy Now Pay Later items on the original balance of £1500.
    The default is due to drop off the accounts next year but for the balance of the £2000 I was taken to the county court. The court awarded me a variation in my favour agreeing to what I admitted I owed +£300 in costs at £15 a month. Claimant, he has received the variation bt asking a payment of £2400 at £15. The court awarded me £750 + £310 in costs at 15 a month.
    On the debt of £1300 I have got them to agree to my initial balance of £350 to settle the account but the stumbling block is partially settlement. I was going to pay £10 a month default expires in August 2019.
    Does the partial settlement really affect my credit rating or is it better than a default provided I can add a correction to the specific account in question for the lenders to see?
    Is this debt still eligible after 6 years or is it statue barred? What happens when the default expires and I still owe some money to them?

    Reply

    • I think all your questions relate to the non CCJ debt where they have offered a partial settlement?

      “Does the partial settlement really affect my credit rating or is it better than a default provided I can add a correction to the specific account in question for the lenders to see?” that is a confused question. A partial settlement is not an “alternative” to a default. It is in addition. Not sure how a notice of correction is going to help you at all?

      “Is this debt still eligible after 6 years or is it statue barred?” if you have been making payments, it will never become statute barred.

      ” What happens when the default expires and I still owe some money to them?” it drops off your file but you need to carry on paying the debt or they will take you to court for a CCJ for that. See https://debtcamel.co.uk/debt-not-on-my-credit-file/

      Reply

      • Hi Sara
        Sorry for the confusion in the above text let me try bullet points.
        •Debt with a variation offered by county court (£1100 to be paid at £15 a month) whose default date is 20/Aug/2014 what happens to this debt come 20/Aug/2020 after 6yrs. Is this debt still enforceable and does it appears on my credit file? Is this variation the same as a CCJ even though I was willing to go to court but the judge decided on submissions provided and asked for hearing date to be vacated since Lowell were willing to agree to a settlement plan but for a higher price which he refused.
        This still in court with the judge as Lowell are telling me to pay £2400 at £15 a month so I went back to court including asking the judge to wave the additional fees as I have always maintained the same balance being owed n proof of unrecorded payments to the tune of over £500 btwn the time I am said to have defaulted.
        • What is the difference between a Variation and a CCJ?

        • Debt with settlement agreed over the phone no action has been taken yet as I refused the partial settlement and they said they will go back to the debtor and highlight the issues discussed but the offer still stands at £350. I was planning on paying £10 a month but the default date is 10/Jul/2014 what happens too when we come to 10/Jul/2020. Is this debt still enforceable and does it drop off my credit file?

        Reply

        • The court case – it sounds as though originally you were being given a CCJ which you did not defend but offered a monthly payment? But now you are trying to dispute the amount because the creditor has said it has increased? I can’t tell quite where you are in the process here but the end result sounds likely to be a CCJ for some amount to be paid at £15 a month. That will be a CCJ.

          A variation changes the terms of a judgment (“varies them”). Typically it changes the monthly payments amounts. It doesn’t remove/delete the judgement.

          I suggest you talk to National Debtline on 0808 808 4000 about your case or post on Legal Beagles forum: https://legalbeagles.info/forums/forum/legal-forums/court-claims-and-issues.

          Not sure why you refused the partial settlement – unless you couldn’t afford it? If you are paying £10 a month this debt will always be enforceable even after it disappears from your credit record in 2020.

          Reply

  32. I have a minor question. People talk of the date a default goes on your record s being significant – as obviously it falls off your file 6 years later. But I have an account which has a marker showing month by month it is in default (ie the company seem to add this every month when the records are updated). Will the record cease to exist 6 years from the start date or 6 years from the last monthly ‘default’ record? Cheers.

    Reply

  33. Hi,

    I’m hoping you can help me?
    If a person with 8 defaults is able to clear 7 of these via partial settlements, will this increase their credit score. The defaults started late 2015/early 2015 so not due to drop off for a couple of years yet.
    This person is looking to obtain a mortgage and has been told the lender isn’t concerned about the defaults, just whether he will pass the credit score but we’re not sure that partially settling 7 of the 8 defaults will improve his score significantly enough?

    Many Thanks

    Reply

    • “This person is looking to obtain a mortgage and has been told the lender isn’t concerned about the defaults, just whether he will pass the credit score”
      That is VERY unlikely to be an accurate description. Did it come directly from the lender? Or from a broker?

      The facts are:
      – settling a debt, in full or partially, does not change your credit score from a credit reference agency at all.
      – mortgage lenders don’t use a credit reference agency’s score anyway – they will use their own internally developed scoring mechanism.

      Now I can’t say how any particular lender’s scoring works. But in general:
      – mortgage lenders care a LOT if you have any defaults which have not been settled. So just settling 7 out of 8 is not good enough, all 8 need to be sorted.
      – most mortgage lenders want the defaults to have been settled for a year before they will consider a mortgage.
      – some mortgage lenders may care if the settle the debts partially, others won’t.

      See https://debtcamel.co.uk/dmp-partial-settlement/ for more about the settle partially or in full issue if you want a mortgage.

      Reply

  34. Hi

    What would you do with a debt previously with mbna then sold to Idem over 6 years ago.

    Reported on credit file only by Idem. As Mbna sold it over six years ago so it’s dropped off with them. MBNA won’t put a historic default on as the account is not being reported anymore and Idem won’t do it as they same I’m up to date with them.

    Requested CCA from Idem, they can’t provide and say it’s not enforceable. If I stop paying them they say they’ll put a default on and if I agree a F+F they’ll mark as partially satisfied.

    Thoughts?

    Reply

  35. Hi, I have defaults ranging from 2015 to last month. Most of them have offered me a discount if I clear the outstanding balance. I might be able to lend the money from a family member to pay them. Will I be better off paying in full or accepting a discount. I would like to finance a car next year for £10,000.

    Reply

    • You have no chance of car finance at a half reasonable rate with recent defaults on your credit record, whether they are settled in full or not.

      Honestly your best plan is to get F&Fs for as low amount as possible. That will probably be on the older ones, and pay token payments to the more recent ones until they are sold to debt collectors and you get offered better deals. And go for finance on a much cheaper, older car, go for a reliable make.

      If your debts are extremely high, look at Insolvency options such as a DRO or bankruptcy and ask your relative to use the money to buy a car that you can drive. Talk to a debt adviser before getting into debt with a relative and taking out high cost car finance, as that route leads straight back to more high cost credit and more defaults.

      Are any of your recent defaults on high cost credit? If so look to see if you can make any affordability complaints. You may be able to get amounts owed reduced or wiped if you had previous loans from that lender, or even get a refund which would help you clear other debt. See https://debtcamel.co.uk/tag/refunds/.

      Reply

      • Thanks for your reply Sara,

        Would a fully settled default look any better then a part settled default? I have been offered a 20% discount on a £3,500 debt, is this a good deal. All my debts add up to about £6,500.

        Thanks,
        Will.

        Reply

        • I guess that is one of the older defaults?
          Do you have car finance at the moment?
          What has caused all these defaults? And do you have other debts which haven’t defaulted?

          Reply

    • Hi,

      I don’t have a car finance and all of my debts have defaulted. My first account to default was a phone contact in 2015 for £700. Then I had credit cards and got myself stuck when getting balance transfers but keeping the old cards. Before I knew it I was £4,000 in debt with credit cards. I also had an account with Jacamo (Store Credit account) for £2,000. Last year I lost my job and couldn’t pay them so they have all defaulted. I still have a phone contact and virgin media on my credit file and they are perfect. Lowell owns my phone contact, Jacamo and a credit card that totals to £3,500. They sent me a letter last week offering a 20% discount.

      Reply

      • ok so first some general facts.
        1) Paying off defaults doesn’t improve your credit score at all. But it may make some lenders more likely to lend to you.
        2) settling a debt partially not in full, adds a flag to the debt which a lender can see. But it doesn’t affect your credit score.
        3) some lenders may care about debts settled partially, others don’t mind just so long as you don’t owe anything there.

        Then looking at your case.
        – you managed to get into a real mess when you had a job but running up too much debt. Now you are hoping to incur a much larger amount of debt on car finance and also borrow money from a relative to settle your defaulted debts. This isn’t a sensible option.
        – it is VERY unlikely you will be able to get cheap car finance deals with such a poor credit record even if you settle the debts in full.
        – your defaulted debts will not be incurring any interest. To borrow from a relative to clear them is risky.

        It would be much better to borrow £5k or whatever from your relative and buy a cheap car outright. No finance. Then use the £300+ a month the car finance would have cost – which you think you can afford – to repay your relative and to set up payment plans for the defaulted debts.

        This is a much lower risk strategy. If your income drops, you can reduce your payments and not have the car repossessed. And after a couple of years, you will get much better F&F offers on the defaulted debts

        Reply

  36. I have received a letter from link looking for a debt that defaulted 21/03/2013 which is more than 6 year ago now.

    They have stated a date of 6/10/18 balance brought forward then a date again of 5/4/19 balance carried forward.

    Will this be a default again and effect my credit rating as it has improved since having a bad spell when construction trade took a dive in 2013 I have a few credit cards also awaiting a brand new lease car coming in the next few months I’m trying to build my credit back up and not wanting this to be a new default or affect my credit rating.

    Any help or advice would be great thank you.

    Reply

    • When you say it defaulted in 21/03/2013, do you mean that is when you stopped paying it? Or was a default date added to your credit record at that point? Is the debt currently showing on your credit record?

      Reply

      • pretty sure that is the default date have not got the letter on me as I’m at work will have a check but that was the date on letter.

        so will this be a new default do you think ? will this affect my credit file I dont have Experian I had just left my credit and got a card to build credit then have had a few more since then and just got accepted for brand new car so assumed my credit had improved and this would drop off from my file this year as they have even been in contact to offer reduced payment.

        Reply

        • A debt with a default date of 21/03/13 should already have dropped off your credit record. Are you sure it says a default date? or a missed payment date? What report are you looking at?

          Reply

          • I signed upto credit club and there is no sign of it on my account the letter says that is the date of the default, what I’m trying find out can they default this again or are they just pestering me hoping I will pay or acknowledge the debt ? what do I do for them to stop sending me letters ?

  37. Here is my situation. I had to leave UK in June 2013 due to huge immigration mistake. Long story short, I have left some unpaid balances and did not have a chance to pay them earlier. I came back in July 2015 and had to start from the very beginning. I have recently checked Experian and it shows 5 defaulted accounts and balance of around 5k. I was preparing myself to start paying it off but someone advised me to check my credit report on Noddle and Clearscore. Here is where the funny part starts. Noddle shows me 10 defaulted account, 13k in balance and unknown to me amounts/ accounts. Clearscore does not show any defaulted accounts but gives me low credit score. I am confused and scared as I am not prepared to pay such money. Also do not know where to start. I have read online that debts are being statued barred if no communication was made between creditor and borrower for more then 6 years. Does it mean that my debts will be cleared within few months? Will it still affect my credit score? Thank you in advance for any help.

    Reply

    • there are 3 different credit reference agencies:
      Experian
      Equifax – which is what the Clear Score reports on
      Call credit – which is what the noddle report is on.

      It is common for these to be very different – for example most high cost credit only appears on Noddle. You need to produce a “combined” list of your debts acorss all three reports. A few debts will show on more than 1 report, but many will only be on 1.

      The reason you may not recognise some of the names on Noddle is because the debts have probably been sold by the original lender to a debt collector.

      “I have read online that debts are being statued barred if no communication was made between creditor and borrower for more then 6 years. Does it mean that my debts will be cleared within few months?” See https://debtcamel.co.uk/statute-barred-debt/ as this is not as easy as it might sound.

      I suggest you talk to National Debtline about your situation, whether any of the debts are likely to be statute barred soon, and what your options are.

      Reply

  38. I have now settled all my debts that were no longer being reported on my credit file, using the CCA agreement request and then settling for around 5%.

    I have two debts remaining,

    Idem which has the AP and DMP markers against it. They have confirmed they are unable to provide the CCA agreement.

    Link financial which has no markers against it. Not responded to CCA agreement request in 2.5 months.

    Neither has a default against them. I explored getting them added but was unable to as original lender sold the debts over 6 years ago.

    With current payments these would be cleared in around 8 months.

    My question is, is there any value in agreeing reduced settlements with either of these two? or would the partially settled marker be detrimental?

    Reply

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