You may be able to remortgage with defaults you have paid off, and a satisfied default is often viewed more favourably than one still outstanding. Paying it does not remove it, though. A default stays on your credit file for 6 years from the default date, paid or not. What changes is the status: your file shows the debt was dealt with, and when. Lenders may also weigh how large each default was, what it was for and how long ago it happened.
Below we cover partial settlements, updating your record and how small utility defaults may be treated. For the wider picture, see our main page on remortgaging with defaults.
On this page
This page covers
- Credit issue
- DefaultsUsually stays on your credit file for 6 years from the default date.
- Status
- Satisfied or settledSettled issues are generally viewed more favourably than ones still outstanding, though they remain on your file for the full period.
Read the main guide: Remortgaging with defaults on your credit file
In short
- A default stays on your file for 6 years from the default date, paid or not.
- Paying in full should update it to satisfied or settled. Paying less than the full amount usually shows as partially settled.
- Some lenders may view a small settled default, such as a phone bill, differently from a larger credit default.
- Keep settlement letters and check that all three credit reports show the updated status.
Satisfied, settled or partially settled: what is the difference?
When you clear a defaulted account, the creditor should update what it reports to the credit reference agencies. The wording varies by agency, but the status tells a lender whether the debt was paid in full, paid in part or is still owed.
| What you paid | How it usually shows | How long it stays |
|---|---|---|
| The full balance | Satisfied or settled, with a zero balance | 6 years from the default date |
| An agreed lower amount (a full and final settlement) | Partially settled | 6 years from the default date |
| Nothing yet, or paying by instalments | Default with an outstanding balance | 6 years from the default date |
Labels vary between Experian, Equifax and TransUnion. The 6-year period runs from the default date in every case.
A partial settlement can be a sensible way to close a debt you cannot pay in full. Some lenders may view it less favourably than a default paid in full, because the creditor accepted less than it was owed.
Why paying a default does not shorten the 6 years
The default date is set when the creditor closes the account, normally after about 3 to 6 months of missed payments. The 6 years run from that date. A default recorded in March 2023 should drop off in March 2029, whether you paid it the following week, years later or not at all.
That can feel unfair, but paying still helps. An outstanding default can mean a creditor is still chasing a balance, which a new lender may treat as a commitment when working out affordability. A satisfied one removes that question, and the settlement date shows you dealt with it.
The default date should not move when you pay, or if the debt is passed to a collection agency. If a report shows a later date than you expect, raise it with the creditor and the credit reference agency, because a later date would keep the default on your file for longer.
Do small utility defaults count the same as larger credit defaults?
Not always. Some lenders may treat a small settled default on a phone contract, energy bill or broadband account differently from a default on a personal loan, credit card or car finance, particularly if it was a one-off and some time ago. Some may give little weight to small defaults once they are satisfied. Others count every default in the same way.
There are no fixed rules, and criteria change, so an adviser will usually ask for the amount, account type and date of each default rather than just how many there are.
If you have more than one, see remortgaging with multiple defaults. If a debt went on to become a court judgment, our page on remortgaging with a satisfied CCJ covers how that is recorded.
How to update the record and get settlement letters
- Ask the creditor, or whoever now owns the debt, for a letter confirming the account is paid, the amount and the date.
- Keep the letter with any final statement. If the debt was sold, get confirmation from the company you actually paid.
- Allow time for the creditor to update the agencies, then check your free statutory report from Experian, Equifax and TransUnion.
- If any report still shows a balance, raise a dispute with that agency and send a copy of your settlement letter.
Keep settlement letters for the full 6 years. Old debts can be hard to trace later, and an adviser or lender may ask for proof if a report looks out of date. Entries linked to the same account, such as the missed payments before the default, stay on your file separately. Our guide on what counts as adverse credit explains how the different entries fit together.
What lenders may look at with satisfied defaults
| Factor | Why it matters |
|---|---|
| Default date | How long ago each default was registered. It drops off your file 6 years after this date. |
| Settlement status | Whether it was satisfied in full, partially settled or is still outstanding. |
| Date settled | When you cleared it. Paying soon after the default can read differently from settling just before you apply. |
| Amount | The original default balance. Some lenders may view small defaults differently from large ones. |
| Type of account | A utility, phone or broadband default may be viewed differently from a loan, card or finance default. |
| Mortgage payment history | Whether your mortgage was kept up to date, including while the default happened. |
| Loan to value and affordability | How much you want to borrow against your home’s value, and whether the payments look affordable. |
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 default date, original amount and creditor for each default
- Settlement letters showing the amount paid and the date
- Whether any default was settled for less than the full balance
- Copies of your reports from all three credit reference agencies
- Your mortgage balance, deal end date and an estimate of your home’s value
- Proof of income and your regular outgoings
Frequently asked questions
Should I pay off a default before I remortgage?
Paying it will not remove it or shorten the 6 years, but it changes the status to satisfied and removes an outstanding balance from your file. Many lenders view that more favourably. If you are considering a partial settlement, ask an adviser how it may be viewed first.
Is a partially settled default worse than a satisfied one?
Some lenders may see it that way, because the creditor accepted less than the full amount. It is still usually viewed more positively than a default left unpaid, and it closes the debt.
My default is paid but my credit file still shows a balance. What should I do?
Contact the creditor with your settlement letter and ask it to update the agencies. If it does not, raise a dispute with each agency showing the wrong balance. An out-of-date entry could affect how a lender assesses you.
Can a satisfied default be removed from my file early?
Not just because it is paid. A correctly recorded default stays for 6 years from the default date. It should only be removed early if it was recorded in error, for example if the debt was not yours.
Does a settled default from a mobile phone contract matter?
It shows on your file like any other default. Some lenders may give less weight to a small, settled default of this kind, especially if it is older and your credit has been clean since, but criteria differ.