Derogatory is referring to negative items and delinquent items. It effects your score negatively.
If you have settled with a creditor then you generally have negotiated making payments lower than what was originally required to pay off your bad debt to them. They will normally accept a settlement because they have accepted the loss a long time ago. This does not mean they have to report you up-to-date or “paid as agreed” because technically you’re not. The good thing is that you will eventually have a zero balance on that delinquent account and that always looks better.