A partially settled default, sometimes shown as "part settled" or a full and final settlement, means the creditor agreed to close the account for less than the total balance. It is a step up from a default left unpaid, because the debt has been dealt with rather than left outstanding, but it can be viewed differently from a default paid in full. Some lenders treat the two much the same once the account shows no balance. Others look more closely at a partial settlement, particularly if it was recent or for a large amount.
This page explains how a partial settlement is recorded, why some lenders may view it differently from a full payment, and when negotiating one before you apply might help. See our main page on remortgaging with defaults for how defaults are dated more generally.
On this page
This page covers
- Credit issue
- DefaultsUsually stays on your credit file for 6 years from the default date.
- Status
- Some settled, some notA lender will usually look at each item separately as well as the overall picture.
Read the main guide: Remortgaging with defaults on your credit file
In short
- A partially settled default means the creditor accepted less than the full balance owed.
- It stays on your file for 6 years from the default date, the same as any other default.
- Some lenders may view it slightly less favourably than a default paid in full.
- A settlement offer is usually made in writing and confirmed before you pay.
What does a partially settled default mean?
When someone cannot pay a default in full, a creditor sometimes agrees to accept a lower, one-off amount to close the account, often called a full and final settlement. Once that lower amount is paid, the account is usually reported as partially settled rather than settled in full, because part of the original balance was written off rather than paid.
| What happened | How it usually shows | How it may compare |
|---|---|---|
| Full balance paid | Satisfied or settled, nil balance | Usually viewed most favourably of the three |
| Lower amount accepted and paid (full and final) | Partially settled | Often viewed reasonably well, though some lenders look more closely |
| Nothing paid, or still being paid | Unsatisfied | Usually viewed least favourably; see our page on unsatisfied defaults |
Labels vary between Experian, Equifax and TransUnion. The 6-year period from the default date is the same in every case.
Why do creditors accept less than the full balance?
A creditor may accept a partial settlement because recovering the full amount looks unlikely, particularly on an older debt, or because a lump sum now is worth more to them than waiting for smaller payments over time. It is a commercial decision on their part, not an entitlement, so an offer can be refused or a higher figure asked for.
A settlement figure is usually only valid for a set period and should always be confirmed in writing before you pay, including the exact wording the creditor will report to the credit reference agencies. Ask specifically whether the account will show as partially settled or settled, since the wording can affect how it looks later.
How may lenders view a partially settled default?
There are no fixed rules. Some lenders treat any default with a nil balance in much the same way, whether it was paid in full or partially settled. Others look more closely at a partial settlement, reasoning that the creditor accepted less than it was owed, and may ask more questions about the amount originally involved and how recently it was settled.
The type of account and how long ago the settlement happened both tend to matter alongside the fact that it was partial. A phone or utility default settled for slightly less some years ago is a different picture from a large loan default recently settled for a fraction of the balance. See phone or utility defaults for how smaller accounts may be viewed.
Should you negotiate a partial settlement before you remortgage?
If you cannot realistically pay a default in full, a partial settlement can still be worth pursuing, because it closes an outstanding balance rather than leaving the account unsatisfied. Weigh this against paying in full if you can afford to, since that generally gives the widest choice of lender.
- Get an up-to-date balance and default date from the creditor or the company that now owns the debt.
- Ask what settlement figure they would accept, and get any offer confirmed in writing.
- Ask exactly how the account will be reported once settled.
- Keep the settlement letter and check your credit reports update correctly afterwards.
If you are unsure whether to settle in full, in part or wait, National Debtline and StepChange can give free advice on negotiating with creditors before you commit any money.
What lenders may weigh with a partially settled default
| Factor | Why it matters |
|---|---|
| Amount written off | How much of the original balance the creditor agreed to waive. |
| Date settled | How long ago the partial settlement was agreed and paid. |
| Original default amount | The size of the debt before the settlement, not just the amount actually paid. |
| Type of account | A utility or phone default may be viewed differently from one on a loan or credit card. |
| Number of defaults | One partially settled default is usually easier to explain than several. |
| Mortgage payment history | Whether your mortgage stayed up to date while this default was outstanding. |
| Loan to value and equity | More equity generally widens the choice of lender. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- The original default balance and the amount actually paid
- The settlement letter confirming the amount and how it would be reported
- The default date and the date the settlement was paid
- Copies of your credit reports showing the updated status
- Your mortgage balance, deal end date and any early repayment charges
Frequently asked questions
Is a partially settled default the same as a satisfied default?
Not quite. Both usually show a nil balance, but a partially settled default shows that the creditor accepted less than the full amount, while a satisfied default was paid in full. Some lenders treat them almost the same, while others weigh the difference.
Should I pay a default in full instead of negotiating a settlement?
If you can afford to, paying in full generally gives the widest choice of lender, since some may view it more favourably than a partial settlement. If full payment is not realistic, a partial settlement is still usually better than leaving the default unsatisfied.
Can a creditor still chase me after a partial settlement?
Not for the amount that was written off, once a settlement is agreed and paid in line with the written offer. Always get the agreement confirmed in writing before you pay, so there is no dispute later about what was owed.
Will a partially settled default show as fully paid on my credit file?
It should show that the debt is closed with a nil balance, but the specific wording, such as "partially settled" rather than "satisfied", can differ between the credit reference agencies. Check all three reports after the settlement is applied.