Credit Repair: What Is An Undesignated Account?

What does it mean when an account is undesignated?

It can be confusing for a layperson to read a credit report. The typical report is filled with dozens of strange codes and terminology so that it is almost enough to make your head spin. One of the many codes you may see listed on your credit report is something like U or UNDESIG. These terms stand for an account labeled undesignated.

But what the heck IS an undesignated account? Simply put, it is an account for which the creditor did not report enough information to give it any kind of more specific label. In plain English, it is sometimes an account that you have just opened or that you have never used, and it therefore has no payment history to report. It can also mean that the account is unspecific and the creditor just does not have enough information to say what type of account it is, or it may mean that some kind of circumstance prevented the labeling of the account for the purpose of the credit report being pulled.

Why would that matter? Well, of the credit line accounts you have open, creditors and potential creditors look at the history of payments you have made in order to give them some kind of label. Some of the other labels you may see on your credit report may include terms such as INDIV or I, which means it's an individual account that's registered to just one person. You may also see codes indicating joint accounts, shared accounts, trust accounts, co-signed accounts, et cetera.

Since most accounts qualify for some kind of designation, what might cause an account to be reported as undesignated? The most common answer is for privacy reasons, particularly in the case of joint accounts. Sometimes, a person may hold a joint account, but then be applying for some kind of line of credit that need not involve the credit history of the other person who held the joint account along with that individual.

One common circumstance is that an agency might be pulling a report on an individual who has had a joint account with someone else in the past whose information is not being pulled for the purpose of the report. For example, if a woman divorces a husband with whom she held a joint account, then remarries and is applying for a loan with a new husband, the joint account she held with her former husband may show up as undesignated so as to protect the privacy of her ex-husband (whose credit history has nothing to do with the new loan that the woman is applying for). This use of the undesignated rating exists to protect the privacy of the other person. The undesignated rating may also be used at the request of married couples who wish to keep one another's credit information separate, so that the undesignated label may be used with individual accounts that do not relate to the married couple's joint credit history, or the married couple's joint accounts remain separate from the individuals' personal credit histories.

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