A reader asked:
My Credit Karma report shows some settled debts but one is shown as satisfied. I am sure I paid them all off in full. Does it make a difference and should I ask for this to be changed?
What is the difference between Satisfied and Settled?
On credit records, debts which have been repaid in full are:
- shown as Satisfied if a default has been added to the record;
- shown as Settled if there is no default on the record.
On the report above, this is confirmed by the names of the creditors. Motormile Finance is a debt collector – this debt would have defaulted at some stage and then been sold to the debt collector. Provident and Quickbridge are lenders – there may have been late or missed payments on these two debts but no default was added. You can see the full repayment history for each debt by clicking on the purple plus sign.
There are now a large number of ways to look at your credit records and score. Some are free, some paying a one-off charge, others a monthly fee. Which one you should use depends on what sort of detail you want, see What’s the best way to check your credit record for details.
The following CreditExpert report shows how this situation is reported by Experian. I’ve highlighted two loans, the defaulted one is marked Satisfied, the non defaulted one is marked as Settled:
A debt which has been closed with an agreed full and final settlement will be marked as Partially Settled or Partially Satisfied.
Is Settled better than Satisfied?
There is a big difference for your credit score in future, but it’s not always easy to tell which is best:
- 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.
If all payments were made on time, then a settled debt is great for your credit score. It shows you borrowed money and repaid it on time – just what future lenders like to see.
But if the settled debt has late payments or arrangement to pay markers, these are going to be showing on your credit record for a long while. If there are a lot of these and they started several years ago – perhaps you have been debt management? – then it may be better if you ask for a default to be added because it will go sooner! See What should the default date for a debt be? for more details.