Understanding “Good Standing” on Your Credit Report

When it comes to managing your credit, understanding the term “good standing” is crucial. At O1ne Mortgage, we believe that a well-informed customer is a successful one. In this blog, we will delve into what “good standing” means on your credit report, how it affects your credit scores, and why maintaining accounts in good standing is essential for your financial health. If you have any questions or need mortgage services, feel free to call us at 213-732-3074.

What “Good Standing” Means on Your Credit Report

Your credit report is a detailed record of your credit history, and the term “good standing” signifies that you have been making your payments on time or have paid off the account in full without missing any payments. This status can apply to both open and closed accounts. Essentially, an account in good standing is one that is current and free from any negative marks such as late payments or defaults.

Different credit bureaus may use varying terminologies, but the essence remains the same. If you miss a payment by at least 30 days, your creditor will report your account as past due to the credit bureaus (Experian, TransUnion, and Equifax). Once you bring your account current, its status will change from past due to current, but any negative marks will still be visible in your payment history.

Accounts in Good Standing vs. Potentially Negative

It’s important to distinguish between accounts in good standing and those that are potentially negative. Here are some examples:

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. For instance, missing a payment by just one day might make your account delinquent, leading to late payment fees and loss of 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 demonstrate that you have been managing and repaying loans or lines of credit as agreed, which is a good indicator to lenders that you will repay new credit accounts responsibly. However, the exact impact on your credit scores depends on several factors, including the type of account, its credit utilization ratio, and other information in your credit report.

Both open and closed accounts in good standing can affect your credit scores:

• Open accounts in good standing: These stay on your credit report indefinitely.
• Closed accounts in good standing: These remain on your credit report for up to 10 years.

It’s worth noting that 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. However, 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

Regularly monitoring your credit score and report is essential for maintaining good financial health. 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 invaluable when you’re trying to improve your credit scores.

At O1ne Mortgage, we are committed to helping you achieve your financial goals. Whether you’re looking to buy a new home, refinance your existing mortgage, or simply need advice on managing your credit, we are here to help. Call us today at 213-732-3074 for any mortgage service needs. Our team of experts is ready to assist you in making informed decisions that will benefit your financial future.

Remember, maintaining accounts in good standing is a key component of a healthy credit profile. By staying on top of your payments and understanding how your credit report works, you can ensure that you are always in the best position to secure favorable loan terms and achieve your financial objectives.

Thank you for choosing O1ne Mortgage. We look forward to serving you!