What underwriting sees
The UCC filing, if the previous funder registered one and never terminated it. It is public and it is the first thing found.
Any judgment, which is also public record and weighs considerably more than a private settlement.
Your bank statements, which show whether debits stopped abruptly — the signature of a default — and what has happened since.
What makes it workable again
Settle it, and get that in writing. A settlement letter plus a UCC-3 termination is the single most valuable document you can hold here.
Time and clean trading. Six to twelve months of consistent deposits with no negative days does more than any explanation.
A short, factual account of what happened. Underwriters have read thousands of these; a plain explanation of a specific cause and what changed is credible, and vagueness is not.
A smaller ask. A modest facility repaid cleanly rebuilds the record; a large one after a default is not going to be written.
What not to do
Do not conceal it. It is on the public record and in your statements, and being found out ends the application on credibility rather than on the underlying facts.
Do not take a high-cost facility to clear the old one without doing the arithmetic. Refinancing a default at worse terms is how a difficult position becomes an impossible one.
Do not open a new bank account to present a clean history. Funders ask for all accounts, and gaps in the record are conspicuous.