When facing economic hardship, receiving constant calls from bill collectors can be stressful. Calls can be prevented if you communicate with the creditor or collections agency regarding how you plan to repay your debt. Making payment arrangements can help ease your frustration and simplify your payment schedule. However, not all companies report payment arrangements to the credit bureau identically.
Terms of Arrangement
Not all payment arrangements meet the minimum requirements of your creditor. A creditor may persuade you to set up an arrangement just so that the company can ensure the debt is repaid. Request details from the creditor on how the payment arrangement affects your account standing. You want the arrangements to bring your account back into good standing or at least halt any negative reporting to the credit bureau. Always get confirmation from the creditor during your payment negotiations.
Pays As Agreed
Creditors commonly report your account to the credit bureau under the classification "Pays As Agreed" when a payment arrangement is made. However, that payment arrangement must satisfy their requirements. In cases where a creditor still reports the amount as delinquent, contact the creditor immediately to report the error on your report. In addition to the "Pays As Agreed" designation, your account may include notes regarding your specific arrangements to repay your debt.
When you apply for new credit, your credit report shows your "Pays As Agreed" balances and sometimes notes on your account. The fact that your accounts show your commitment to repay your debt can be positive to some creditors but a red flag for others who may view your delinquency as an unnecessary risk. If you must apply for new credit at this time, speak to a representative at the company to communicate the circumstances surrounding the previous debt mismanagement to increase your chances of being approved.
Some payment arrangements will still harm your credit score, which means you have fewer opportunities to qualify for new credit accounts. For example, if you are behind on your mortgage payments, your lender may agree to receive payments and postpone foreclosing on your home. However, until you repay your past due balance, your credit score is still negatively impacted each month. The "Pays As Agreed" only implies that you made a payment arrangements. Some lenders and creditors will not report a "Pays As Agreed" on a past due account until your account is current. In this case, the account is listed as "Not Paid As Agreed."
Will Forbearance Status Affect My Credit Score?
Forbearance -- whether on a mortgage, student loan or other financial obligation -- provides temporary financial relief for those who are unable...
When Do Collection Agencies Report to the Credit Bureau?
Collection agencies are responsible for collecting unpaid debts that an original lender has either been unable to collect or has given up...
How to Make Payment Arrangements After Being Sued
Being sued is always frightening, but it is important to stay calm and rational even in the face of being served with...
How to Make Payment Arrangements on Your Judgment
A judgment is a court ruling that obligates you to do something or grants you rights against another person. If a person...
How to Get a Creditor to Mark a Credit Report Paid As Agreed
Creditors want to get their money when you are late paying a debt. They will pursue you for about six months before...
How Do I Make an Arrangement to Pay My Delinquent Property Taxes?
If you are delinquent on your property taxes, your state law will dictate exactly what you need to do, to keep your...
What Does "Pays As Agreed" Mean on a Credit Report?
In the United States, Equifax, Experian and TransUnion maintain records pertaining to your credit history. These bureaus rate your credit-management skills in...