How Accounts in Good Standing Impact Your Credit Score

“`html

Understanding “Good Standing” on Your Credit Report

An account is considered in good standing on your Experian credit report if all payments have been made as agreed. This means the account is either current or paid off, with no late payments or other negative marks in its history. Accounts in good standing can be open or closed and can impact your credit scores in various ways.

What “Good Standing” Means on Your Credit Report

Your credit report may use different terminology depending on where you obtain it. However, an account is in good standing if payments are made on time, or if the account is paid off in full without any missed payments.

If a payment is missed by at least 30 days, the creditor will report the account as past due to the credit bureaus (Experian, TransUnion, and Equifax). Bringing the account current can improve your creditworthiness, changing the status from past due to current. However, an account may still be marked as “potentially negative” if there is a negative mark in the payment history.

An account could also be potentially negative if it was settled for less than the full amount owed. If you’re struggling to make payments, contact your creditor before missing a payment. They might offer a temporary or permanent adjustment to keep the account in good standing.

Accounts in Good Standing vs. Potentially Negative

Below are examples of when an account may be considered in good standing or potentially negative on your credit report:

• Good Standing: Open/Never late, Closed/Never late, Refinanced, closed/Never late
• Potentially Negative: Past due, Account charged off, Collection account, Repossession, Voluntary surrender, Foreclosure, Settled, Bankruptcy Discharged

Be aware that your creditor may have a different definition of good standing, which could affect your account. For instance, missing a payment by just one day might make your account delinquent, leading to a late payment fee and lost benefits, discounts, and rewards.

How Do Accounts in Good Standing Affect Your Credit?

Accounts in good standing can have a positive or neutral effect on your credit scores. They show that you’ve been managing and repaying a loan or line of credit as agreed, indicating that you’ll likely repay a new credit account as agreed. However, the exact impact on your credit scores depends on specific factors such as the type of account, its credit utilization ratio, and other details in your credit report.

Closed and paid-off accounts can also affect your credit scores as long as they’re listed in your credit report:

• Open accounts in good standing: Stay in your credit report indefinitely
• Closed accounts in good standing: Stay in your credit report for up to 10 years

However, the credit scoring factors may differ slightly for closed accounts. For example, closed accounts still count toward age-related metrics, such as the average age of your credit accounts. But paid-off and closed accounts in good standing won’t affect your credit utilization ratio and might not impact your credit mix.

Monitor Your Credit Score for Changes

You can get a free copy of your credit report from Experian and track your credit score and report for free to monitor changes. Your free Experian account can also show you what information is helping and hurting your score the most, which can be useful when trying to improve your credit scores.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to assist you with the best mortgage solutions tailored to your needs.

“`