Imagine you’re on vacation in Puerto Vallarta, making your way to the car rental kiosk at the airport after having landed not too long ago. When you go to pick up your car, you’re told you have to pay a $500 security deposit for the car rental because you have “too few accounts paid as agreed” on your credit report. You’re now confused and in disarray. You think to yourself, “I’ve never once missed a payment on my credit card!”

Therein lies the problem with “paid as agreed.” And it happens more frequently to new credit users than you would think. Anyone that has faced financial hardship due to job loss or divorce may also be confronted with the same issue. Luckily, in both circumstances, there are steps you can take to overcome this frustrating credit issue.

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What does “paid as agreed” mean on my credit report?

You always want to see “paid as agreed” on your credit report because it means that you have been paying off your debt as originally agreed. When you pay as agreed, you are essentially paying your credit account balances on time each month as per the terms of your lending agreement or credit card contract. Ideally, the “Status of Accounts” section of your credit report should be positive, meaning you would be considered a low-risk candidate for new credit.

Two reasons you encounter “too few accounts currently paid as agreed”

“Too few accounts currently paid as agreed” does not necessarily mean you have failed to make timely payments or that there are unpaid accounts appearing on your credit report, although it can mean that in some cases. But in others, it can be a result of simply having too few credit accounts on your credit history.

In either case, it can negatively impact you because lenders use this information to gauge your creditworthiness. So, having “too few accounts paid as agreed” can keep you from opening the new credit accounts that you want.

Reason No.1: You have a “thin credit file”

Basically, this means your credit history shows a low number of accounts that demonstrate being “paid as agreed.” In layman’s terms, you don’t have enough credit lines on your credit file. Thus, lenders don’t have enough information to judge how likely you are to repay your debts.

In this case, this message can appear on your report even if you’ve been making timely payments on existing credit lines according to the terms of your accounts.

So, it may be a good idea to open some new credit lines on a reasonable timeline to build up your credit file. We’ll explain more on this below.

Reason No.2: You’ve had some credit challenges

The other reason you may see “too few accounts currently paid as agreed” is that you failed to make on-time payments on too many of your accounts. Therefore, you will need to start making all your payments on time and paying off your debts on the agreed schedule.

How “paid as agreed” impacts your credit scores

Your credit score is influenced by five major factors:

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • New credit applications (10%)
  • Credit mix (10%)

So, having everything listed as “paid as agreed” on your credit report is one of the best things you can do for your credit. By contrast, when you fail to make payments on a debt, you can seriously damage your credit. If you don’t catch up quickly, your credit gets dinged for every month you remain behind.

And if you miss payments on a debt for 120 to 180 days, your account can end up in default and get charged-off. Basically, the creditor or lender has written your debt off as a loss, and this loss can stay on your credit history for up to 7 years from the date the account became delinquent.

Ideally, you want to see “paid in full” on your credit report for any loans and credit cards that are closed or “current” for any accounts that are open.

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Overcoming your “paid as agreed” credit shortfall

The strategy for getting out of the “too few accounts paid as agreed” trap varies depending on how you’ve gotten popped with that status.

How to get ahead of your thin credit file

Overcoming a thin credit file takes time, but with the right steps, you can out of the “too few accounts paid as agreed” status in about six months to a year.

The strategy is to gradually open new credit lines and then make sure they are paid on time. You want to avoid opening a bunch of new credit all at once. There are two reasons:

  • Depending on the types of accounts you open can trigger multiple credit inquiries over a short period, and each will ding your credit score. And since your file is thin, the impact may be significant.
  • You need to make sure you can manage the payments effectively on one credit line before you open another.

So, you want to open credit lines that won’t damage your credit in the process that are also fairly easy to manage as a new credit user. So, follow this plan:

  1. Research secured credit cards and credit builder loans, both of which are excellent tools for building credit if you are a new credit user.
    1. In most cases, neither of these types of credit will create a hard inquiry on your credit report when you apply but check with the creditor when you apply just to make sure.
    2. Tip: If you get a credit-builder loan like Self, it will allow you to open both accounts gradually.
  2. Apply for one secured credit card or a credit builder loan.
  3. After a few months of managing the account, apply for the other product that you didn’t get
    1. This shows you can manage different types of accounts because you will have an installment loan and a revolving credit line.
  4. Make on-time payments on both accounts.
    1. Paying the secured credit card balance off in full every month will give you an additional boost to your score because it will keep your utilization ratio. However, this will not remove the status of “too few accounts paid as agreed” faster.
  5. After about six months, you should no longer have issues with this status. You can continue gradually opening new accounts as long as you can manage the debt.
    1. You should also be able to start applying for traditional credit cards. Just be aware that these will create credit inquiries, so space the applications out by at least six months.

How to get ahead of past credit problems

Step 1: Review your credit report and repair your credit

It is imperative you start by reviewing your credit report. Since your credit report holds the answers to why your credit may be suffering, it is always a good idea to check it and make sure everything is in check.

Moreover, when you review your credit report for inaccuracies, make sure you are looking for incorrect balances, accounts that may have been reported twice, or even accounts showing as late when they were paid on time. Sometimes you may even find that there are open credit accounts that don’t belong to you.

Because your credit report and credit score are tools used to determine your creditworthiness, it is essential that the reported information is accurate. If you find errors on your credit report, make sure to dispute them immediately. You can also file a dispute directly with each individual credit bureau.

To make sure your credit reports are correct, you can use the centralized website for the three national credit bureaus, call their toll-free number, or mail in your request:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

If you find any inaccuracies, make sure to take steps to dispute the mistakes and correct them through the credit repair process.

Step 2: Bring past-due accounts current

Once you have all the mistakes in your credit corrected, you most likely still have accounts that have negative information. Specifically, you may have accounts that are delinquent because you are behind on your payments. Bringing these accounts current needs to be a top priority to get out of the “too few accounts paid as agreed” issue you’re facing.

One option to consider is re-aging. Re-aging an account is the process of changing its delinquency status. Since payment history plays such a substantial role when calculating you credit score, changing the delinquency status can help your credit score.

This type of positive re-aging is designed to help consumers get back on their feet after a financial slump. So, how does it work? Well, when you work out an agreement with your creditor they will take the account that they reported as late and change it to report as “paid on time.”

Sometimes they may go so far as to dig into your past payment history and bring all the delinquent payments current. Otherwise, they will simply list it as “paid on time” from here on out as long as payments continue to be made in a timely manner.

Some credit card companies will re-age your delinquent accounts if you enroll in a debt management plan (DMP) through a credit counseling agency. Once you have made three consecutive on-time payments, creditors will re-age your account to bring the credit account current. However, this will not remove any missed payments you may have already incurred. Still, it’s often the fastest way to bringing multiple past-due accounts current all at once.

Step 3: Rehabilitate defaulted federal student loans

If you are dealing with defaulted federal student loans, there are options available to you. Your student loan servicer will report your account as delinquent to credit bureaus after 90-days of non-payment. After 270 days of missed payments, you will be considered in default.

And when you default, the whole balance becomes due. From there, your options are to either pay the amount in full or find a default-repair option through the government.

One option is to rehabilitate the federal student loan. This requires you make nine reduced monthly payments in a 10-month time span (you are allowed to miss one payment). Once completed, the default notation comes off your credit report. However, if you have any late payments on your credit file that appear before the default, they will remain.

Nevertheless, here is how you can complete the rehabilitation process:

  1. Log in to My Federal Student Aid online.
  2. Find the student loan services that manages your defaulted federal loan.
  3. Use the contact information listed on the website and ask to opt in for loan rehabilitation.
  4. Submit evidence of income to your servicer so the company can calculate your monthly payments. This amount equals to 15% of your monthly income. And you are able to ask for a lower payment if the you find the servicer’s offer is unaffordable.
  5. Make nine monthly payments in the agreed amount. Note: While you continue making payments under your rehabilitation agreement, the government can continue withholding your wages or tax refunds to repay the debt.
  6. Upon completion of the nine full and on-time payments, your loan is no longer listed as in default on your credit report. And you will regain access to federal financial aid and repayment benefits. Your wage garnishments and tax refund withholding will also stop.

But beware, you only get ONE chance to rehabilitate a defaulted federal student loan. So, if you were to ever default again on the same loan, rehabilitation would no longer be an option.

Step 4: Continue rebuilding your credit

With your past-due accounts brought current and defaulted student loans brought current, you should be free and clear of the “paid as agreed” challenge you’ve been facing. Now, it’s just a matter of continuing to rebuild your credit.

  • Open new accounts gradually, spacing new applications out by at least six months.
  • Make all your payments on time.
  • Keep credit card balances as low as possible.
  • Gradually build your way up to getting good debt, such as a mortgage.

Find the best way to catch up on past-due credit cards and charge-offs.

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Article last modified on November 22, 2022. Published by Debt.com, LLC