Understanding Good Standing in Financial Matters
A person or organization in good standing has no financial obligations. Similarly, a person in good standing within an organization may take advantage of membership benefits. A letter of good standing confirms a relationship between a bank and a customer. In most cases, financial institutions request letters of good standing to confirm they can trust an individual or business they are considering servicing. A certificate of good standing shows a business is authorized and active. It’s an essential document to get a business bank account, credit card, loan, and more.
Importance of Demonstrating Good Standing
Demonstrating good standing is normal when opening a bank account, expanding into new states, or applying for a license. A certificate of good standing indicates being up-to-date on state filings and sometimes payments. Yet obsessing over good standing like a report card causes unnecessary anxiety. It also distracts from the real value of good standing, which goes beyond grades. So what does good standing really mean? And when you need that scorecard for a loan or to enter a new state, how do you get it?
Managing Your Bank Account and Credit Responsibly
- How do I know if my bank account is in Good Standing?
You can speak directly with a bank representative at one of the branch locations. If you have the account number, the representative can verify if the account is active. As mentioned, a letter of good standing confirms the existing relationship between a bank and a customer. The customer requesting the letter can either hold a personal account or be the representative of a business with an account at the bank. In most cases, letters of good standing are requested by financial institutions looking to confirm that they can trust an individual or business that they are considering onboarding or servicing. In other words, the letter of good standing takes the shape of a recommendation letter, but from a financial institution.
Some credit card issuers may also define good standing to include keeping your account active and staying below your credit limit. Other accounts with the same bank, even a checking account or loan account, can impact your credit card standing. A checking account in good standing is defined as one that has regular deposits and is brought to a positive balance at least once every 30 days for a minimum of 24 hours and has no delinquent loans with us, legal orders, liens or levies outstanding.
An account in “good standing” is an account that has no negative payment history, past or present. If an account has had even one late payment, then it would be considered “potentially negative.” Most bank accounts are considered inactive if there is not at least one transaction (deposit or withdrawal) within a 12-month period. While it might not seem like a big deal, inactive accounts are actually considered to be a higher fraud risk.
To get money out of a closed bank account you will need to coordinate with the bank (or banker) directly. In most cases, if an account has been closed for compliance-related issues, then the bank will provide a specific deadline for the funds to be withdrawn.
A bank may not know a check is fake until the bank tries to clear the check. This process can take weeks. If you cash the check or deposit the check and then spend the funds, you will be responsible for paying the money back to the bank. The data acquired is centered around the good standing of the check issuer’s account, availability of funds to make the deposit, and the amount of money requested for deposit. Checks that remain outstanding for long periods of time can’t be cashed, as they become void.
All of this means that your business is active and in “good standing.” For most business types, it’s an essential document to get a business bank account, credit card, loan, and much more. Letter of good standing is a document issued by the bank upon customer’s request, used to express the bank’s intent/availability to support and develop the customer’s internal and international business relationships, under certain conditions. Just like people, businesses and financial institutions prefer developing relationships with individuals or organizations they trust. Therefore, when determining whom to trust, these institutions prefer to put their faith in the recommendations of other, similar businesses or institutions.
You’re not wasting money on fees. A good bank account will charge few or no fees, and Davis says that the proper account for you should match up with your financial practices. So, for example, if you don’t keep much money in your account, the one that’s right for you probably won’t charge a fee for not meeting a balance requirement. And if you tend to overdraw, your ideal account wouldn’t punish you with fees when you reach a negative balance.
Knowing Your Credit Status and Responsibilities
For a credit score range of 300-850, 700+ is generally good. 800+ is excellent. Most people score 600-750. Your credit report shows how you manage credit. An account in “good standing” has no negative payment history. Moreover, what is a bank letter of good standing? A certificate of good standing shows a business is authorized in a state. In banking, accounts in good standing are current with no outstanding balances or negative activity.
How do I know if my bank account is in Good Standing? You can speak directly with a bank representative at one of the branch locations. If you have the account number, the representative can verify if the account is active. As mentioned, a letter of good standing confirms the existing relationship between a bank and a customer. The customer requesting the letter can either hold a personal account or be the representative of a business with an account at the bank. In most cases, letters of good standing are requested by financial institutions looking to confirm that they can trust an individual or business that they are considering onboarding or servicing. In other words, the letter of good standing takes the shape of a recommendation letter, but from a financial institution.
Some credit card issuers may also define good standing to include keeping your account active and staying below your credit limit. Other accounts with the same bank, even a checking account or loan account, can impact your credit card standing. A checking account in good standing is defined as one that has regular deposits and is brought to a positive balance at least once every 30 days for a minimum of 24 hours and has no delinquent loans with us, legal orders, liens or levies outstanding.
An account in “good standing” is an account that has no negative payment history, past or present. If an account has had even one late payment, then it would be considered “potentially negative.” Most bank accounts are considered inactive if there is not at least one transaction (deposit or withdrawal) within a 12-month period. While it might not seem like a big deal, inactive accounts are actually considered to be a higher fraud risk.
To get money out of a closed bank account you will need to coordinate with the bank (or banker) directly. In most cases, if an account has been closed for compliance-related issues, then the bank will provide a specific deadline for the funds to be withdrawn.
A bank may not know a check is fake until the bank tries to clear the check. This process can take weeks. If you cash the check or deposit the check and then spend the funds, you will be responsible for paying the money back to the bank. The data acquired is centered around the good standing of the check issuer’s account, availability of funds to make the deposit, and the amount of money requested for deposit. Checks that remain outstanding for long periods of time can’t be cashed, as they become void.