Different payment markers on your credit report

Posted by Sophie Regester in Credit Reports on 20 March 2017 - Sophie is a Senior Credit Analyst at checkmyfile.

There are many elements to a credit report and some can be a little confusing, such as the different markers used to represent different payment statuses on accounts.

Markers such as D or DM can show lenders that you have specific issues relating to your credit accounts, but what do they mean? Here we look at the different markers and what they say about the status of your accounts.

OK

When you are viewing your credit report the best status to see is OK, if you see this it means that the payments for the account in question are up to date in line with your credit agreement. There are many other symbols you can see on your credit file and some are a more welcome sight than others. First let’s get the good news – we will then work our way down to the statuses that you don’t want to make an appearance.

S – Settled or Satisfied

The letter S stands for 'Settled' or 'Satisfied', meaning that an account has been closed satisfactorily. Once an account is recorded in this status, it will continue to feature on your credit file for a further 6 year period. After this time period has elapsed, within 30 days the account will automatically be removed and will no longer be visible on your file to lenders or to yourself.

1 – One Late Payment

A number 1 status confirms that a payment was made late, or you are up to one month behind. One late payment is relatively minor and common as due to human nature, oversights can be made on occasion.

It’s worth bearing in mind that if a payment is due by a certain date and this date is not met, a late payment can be recorded whether this is made 3 weeks late, 5 days late or one minute late, it doesn't make a difference. Many lenders will not use the late payment marker if payment is made within a certain timeframe, and they may have a little wriggle room if extenuating circumstances led to the lateness, but they are not obliged to grant you any favours in this regard. Late is late.

Arrears Monthly Markers

2, 3, 4, 5, and 6 follow on in a very straight forward pattern - the more consecutive monthly payments missed, the numbers increase. Any of these statuses count as ‘arrears’, the higher the number the more serious the arrears and the more negative the connotation for your credit file and score.

D – Default

D represents ‘Default’, which is the most serious case of arrears that can be recorded. A default is also a form of account closure, meaning that the all-important 6 year reporting period starts from the date of default. That being said, the account may only be marked as closed when the outstanding balance has been paid and this may depend on the lender or the credit reference agency they have reported to. Regardless of whether a default is recorded as open or closed, if a balance remains outstanding you can still be chased to repay this indefinitely.

DA

DA is used to show ‘Debt Assigned’, this is reported when an account has been sold to a debt collector and the status with the original lender indicates DA to show it has been passed on.

SF & US – Satisfied Fully and Unsatisfied

SF is used to indicate that an account in default has been paid in full but this does not remove the default status, which remains visible in the account history for the full 6 years from the date of default. Paying a default does not reset the six year reporting period. Conversely US indicates an account in default remains outstanding and has not been fully paid.

PS – Partial Settlement

PS is similar to SF but indicates that a ‘Partial Settlement’ has been agreed, i.e. debtor and lender agree to a lesser amount being paid to settle an account where the full balance is unlikely to be paid.

AR – Arrangement to Pay

AR doesn't really fit the trend previously talked about here, it has the same weighting as serious arrears but is the status used when the normal payments on a credit agreement cannot be met. An ‘Arrangement to Pay’, also known as AR, is on the face of things the responsible way to advise a lender that you cannot pay the usual amount specified in your credit agreement.

Unfortunately it does harm your credit file more than one or two late payments would, and worse still many lenders will not warn you of this. An arrangement can also be recorded when you overpay, because again the payments are not being made in line with your original credit agreement.

Again you may not be warned of this and you may believe you are actually helping your credit file, rather than hurting it by making extra payments.

DM – Debt Management

DM represents Debt Management, debt management plans (DMP) are typically arranged by a third party company or charity who contact and set up regular payments with your creditors. Companies will not do this out of the kindness of their hearts and will take a cut of every payment you make, but debt charities will be able to do this free of charge.

VT – Voluntary Termination

VT stands for voluntary termination and is used when an account that was due to run for a longer period is settled early, for example if you take out car finance to run for 3 years and return the car within one you may well see a VT status on the account. The record of a VT status has a neutral connotation and it is not regarded as a negative.

U, Q, IN & NR

U, Q, IN and NR also all have a neutral status and in this way are similar to one another. U stands for ‘Unclassified’, it is often the status recorded when an account is newly opened and the lender does not have any other activity to report on the account.

Q is for ‘Query’ and is used when an account is under review, usually due to a query between customer and lender regarding the account.

IN represents ‘Inactive’ meaning the account is open but is not currently being used.

Finally NR is ‘Not Reported’, which indicates that an update has not been provided between the lender and credit reference agency.

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