If you have fallen behind on your credit card or loan payments, your lender may talk to you about “bringing your account current.” This simply means that you are paying enough to cover any outstanding balance that has accrued since your last payment.
Stop Calls from Your Credit Card Issuer
If you are behind on payments and have not made any payment arrangements, you will receive repeated phone calls from your credit card company asking you to pay. These calls can be annoying. They are just doing their job by asking you to fulfill your credit card agreement. Once you bring your current account up to date or make a payment arrangement to bring your account current, the calls will stop immediately.
Stop Late Payments from Showing Up on Your Credit Report
Once your payment is more than 30 days late, your account status is updated with credit bureaus, and the late payment will be added to your credit report. Bringing your current account up to date will stop any further late payments from being added to your credit report for this account. However, it does not erase any late payments that have already been reported.
Prevent Charge-Offs or Collections
After six months of missed credit card payments, your credit card account will be charged off and may be sent to a collection agency for further action. After a charge-off, your account is closed and will not be reopened even if you pay off the balance. Bringing your account current before that time will prevent your account from entering this status.
Regain Purchasing Privileges and Obtain Other Loans
Some credit card companies may prevent you from making new purchases on your account if you are behind on payments. Once you settle your overdue balance, you will be able to use your credit card again as long as it has not already been charged off.
How to Bring Your Account Current
You can usually pay the amount owed using the same method you make your regular monthly payment. This may be online, by mail, or by phone. Online and phone payments post to your account the quickest and will keep you updated immediately. If you send your payment by mail, you will have to wait until your credit card issuer receives the payment and processes it before it posts to your account.
It can often be difficult to bring your account current as the amount due includes all previously missed payments along with any late fees. If you are unable to pay the total amount owed immediately, contact your creditor for payment arrangements. They may be able to split the amount due or offer other hardship options so you can catch up again.
Impact on Your Credit
Once you bring your account current, your credit report will be updated to show that your account is no longer past due. Keep in mind that bringing the account current does not erase any late payments that were previously reported.
For example, if you were 60 days late on your credit card payment, then caught up, the 60-day late status will still remain on your credit report, and every payment afterward will show as made on time. The negative details related to the account will stay on your credit report for seven years.
Because bringing your account current does not erase previous late payments, your credit score may not recover immediately. As you continue to make all other payments on time and as the previous late payment ages, your credit score should gradually increase. After seven years, the legal limit for credit report information, the late payment will finally be removed from your credit report.
Source:
https://www.thebalancemoney.com/what-does-it-mean-to-pay-an-account-current-961092
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