If you've fallen behind on your credit card or loan payments, your lender may talk to you about "bringing your account current." That's another way of saying that you make a payment large enough to satisfy any past due balance that's accumulated since you made your last payment.
When an account is current, there is either no payment due right now because you've recently made a payment, or the only payment due now is the minimum payment for the current month. Your credit card issuer wants you to bring your account current because delinquent accounts mean they're losing money. Paying your account current benefits you as well.
Stop Calls From Your Credit Card Issuer
If you're behind on payments and you haven't made any payment arrangements, you'll receive frequent phone calls from your credit card company asking you for payment. These calls can be a nuisance. They're just doing their job in asking you to keep up your end of the credit card agreement. Once you pay your account current or make a payment arrangement to bring your account current, the calls will stop immediately.
Calls from your original creditor don't under the rules of the Fair Debt Collection Practices Act, which guides how third-party collection agencies should collect accounts.
Stop Late Payments on Your Credit Report
Once your payment is more than 30 days past due, your account status is updated with the credit bureaus, and the late payment will be added to your credit report. Paying your account current stops additional late entries on your credit report for that account. It doesn't, however, erase any late payments that have already been reported.
Prevent Charge-Off or Collection
After six months of missed credit card payments, your credit card account will be charged-off and possibly sent to a collection agency for further action. After being charged-off, your account is closed and won't be re-opened even if you pay off the balance. Bringing your account current before that time will keep your account from going into this status.
Restore Purchasing Privileges and Get Other Loans
Some credit card issuers prevent you from making new purchases on your account if it's past due. Once you clear up the past due balance, you'll be able to use your credit card again as long as it hasn't already been charged-off.
Many creditors and lenders will not approve new applications if you're behind on payments on another account. You'll have to take care of your past due balance to have your application approved—assuming you meet the other criteria.
How to Pay Your Account Current
You can typically pay your past due amount using the same method you make your regular monthly payment. That might be whether online, by mail or over the phone. Online and phone payments post to your account the fastest and will have you caught up right away. If you mail your payment, you'll have to wait for the credit card issuer to receive it, then process it before the payment will post to your account.
Bringing an account current is often difficult because the past due balance includes all previously missed payments plus late fees. If you're unable to make your payment right away, call your creditor to make payment arrangements. They may be able to split the payment or offer other hardship options so you can get caught up again.
Impact on Your Credit
Once you pay the account current, your credit report will be updated to show that your account is no longer past due. Remember, bringing the account to current does not erase any late payments that were previously reported.
For example, if you were 60 days past due on your credit card payment, then you got caught up, the 60-day late status will remain on your credit report and every payment after will show as being paid on time. Negative details associated with an account will remain on your credit report for seven years.
Because paying your account current doesn't erase the previous late payments, your credit score may not rebound right away. As you continue to make all your other payments on time and as the previous late payment ages, your credit score should increase gradually. After seven years, the legal credit reporting time limit, the late payment will finally drop off your credit report.