When your account is marked as "in good standing," it means you’ve met the terms of your agreement with the creditor. Typically, this includes:
Making payments on time
Staying within your credit limit (for credit cards)
Maintaining the account without any major delinquencies
Being in good standing reflects positively on your credit report and shows that you’re a reliable borrower.
Why Would a Creditor Mark an Account as In Good Standing?
Here are some common reasons why creditors mark accounts in good standing:
Timely Payments: If you consistently pay your bills by the due date, your creditor sees you as a responsible customer.
Resolved Delinquencies: Even if you’ve had a late payment in the past, catching up and maintaining regular payments can return your account to good standing. Some creditors will update the status once the account is current.
Account Paid in Full: If you pay off a loan or credit card balance, creditors will mark the account in good standing because you’ve fulfilled your financial obligations.
Settlement Agreements: In some cases, if you negotiate a settlement (e.g., through a service like Relief) and fulfill the terms of the agreement, the creditor may update the account status to good standing as part of the arrangement.
Credit Line Management: For credit card accounts, keeping your balance below your credit limit and avoiding penalty triggers helps maintain the "good standing" designation.
What If You’re Delinquent But Still Marked in Good Standing?
It may seem unusual, but there are a few scenarios where an account can be delinquent while still marked as "in good standing":
Grace Periods: Many creditors offer grace periods before reporting late payments or marking an account as delinquent. During this time, your account may still appear in good standing despite a missed due date.
Pending Payment Arrangements: If you’ve worked out a payment arrangement or plan with your creditor, they may keep the account in good standing while awaiting your payment.
System Delays: Sometimes, there is a delay between when a delinquency occurs and when it’s reflected on your account. During this gap, the account may temporarily remain in good standing.
Error or Discretion: Occasionally, creditors make errors when reporting account statuses. In other cases, a creditor might show leniency by not immediately updating the status to delinquent.
Settlement in Progress: If you’re working through a debt reduction or settlement program, the creditor may agree to keep the account marked as good standing while the process is underway.
What Should You Do If You Notice Discrepancies?
If you’re delinquent but your account is marked in good standing, or vice versa, it’s important to:
Check Your Credit Report: Review your credit report for accuracy.
Contact Your Creditor: Ask for clarification or request corrections if needed.
Document Communication: Keep records of all correspondence with creditors for future reference.
Key Takeaway
Being marked as "in good standing" is a positive signal to creditors and credit reporting agencies. However, if you’re delinquent and still marked in good standing, it’s essential to clarify the reasons and ensure your financial records are accurate. Always address delinquencies as quickly as possible to avoid long-term credit impact.