Noticing a negative remark on your credit report can be demoralizing, especially if you are trying to improve your credit score.
An “adverse action notice” is a letter sent by creditors to applicants when their credit application is denied. These adverse action notices contain “reason codes” that attempt to explain why the credit application was rejected.
What Does “Too Few Accounts Currently Paid As Agreed” Mean?
The reason code “too few accounts currently paid as agreed” usually refers to one of two potential situations:
- You have not made payments on time for several credit accounts, or
- Your credit history has only a few accounts on record.
Applications for new lines of credit are influenced by one’s credit history, which contains a credit score. Creditors use it to see if you pay your accounts on time and in full, and then calculate your risk of repaying the loan.
What You Can Do If“Too Few Accounts Currently Paid As Agreed” Appears On Your Credit Report?
A credit report is affected more negatively the longer installment payments are unpaid. Payments later than 30 days can cost up to 80 points on a consumer’s credit score, while those older than 120 days can cost as much as 130 points.
Even if “too few accounts paid as agreed” is used because you have not opened many accounts; your credit report could still appear negative.
To prevent this derogatory remark appearing on your credit report:
- Make payments on time,
- Consider opening new credit lines,
- Reduce your credit utilization ratio, and
- Keep your credit accounts open.
Bottom Line
Derogatory remarks will negatively affect your credit score and make obtaining loans, or new lines of credit more difficult. Preventing derogatory remarks is easier than removing them once linked to your credit score. To improve your credit score, have at least one credit line open and make sure you fulfill the payment terms of your contract.
