How Long Do Closed Accounts Stay on Your Credit Report?

There is a lot of information about your financial history on your credit report, including information on both open and closed credit accounts. But how long do closed accounts stay on your report after you stop using them?

The answer depends on a number of things that we’ll talk about in this article. Discover how closed accounts are shown on your credit report, how long they stay there, and how they affect your credit scores over time by reading on.

An Overview of Closed Accounts on Credit Reports

First, let’s talk about what it really means when an account is closed. When you can no longer use an account, like when you pay off a loan or cancel a credit card, it is said to be closed. You, the customer, or the creditor can close an account.

Closed accounts stay on your credit report for a while after they are no longer being used. Your credit report shows that you have a closed account along with other important information like the date the account was opened, the credit limit or loan amount, and your payment history.

Payment history on both open and closed accounts is a major factor that affects your credit scores. On-time payments can continue to benefit your credit long after an account is closed, while late payments can negatively impact your scores.

How Long Do Closed Accounts Stay on Your Credit Report?

The length of time a closed account remains on your credit report depends on two key factors:

1. Account Status

• Accounts closed in good standing – Remain for 10 years from date of closure
• Accounts closed with derogatory marks – Remain for 7 years from the date of first delinquency leading to closure

An account in good standing means it does not have any negative marks like late payments, collections or charge-offs. As long as you kept the account current before it was closed it will have a maximum 10 year reporting period.

Derogatory marks like missed payments can reduce the reporting period to 7 years from the date of your first late payment on that account. This is because negative information typically falls off your report after 7 years.

2. Type of Account

• Installment loans – Remain for 10 years from date paid in full
• Revolving credit cards – Remain for 10 years from date of closure
• Collections – Remain for 7 years from date of first delinquency
• Public records – Bankruptcy remains for 10 years, other public records remain for 7 years

Installment loans like mortgages, student loans, and auto loans follow the 10 year rule from the date they are paid in full. Revolving credit cards also remain for up to 10 years after being closed.

Collections and most other public records fall off after 7 years, while Chapter 7 bankruptcies stay on your report for a full decade from filing date.

How Closed Accounts Affect Your Credit Scores

The effect closed accounts have on your credit scores varies depending on the payment history and other factors:

• Accounts closed in good standing – Continue to benefit credit for 10 years
• Accounts closed with late payments – Hurt scores for up to 7 years
• Voluntary closure of unused card – Potential for indirect damage from reduced credit history and higher utilization

As mentioned, on-time payment history is valuable long after an account is closed. But if you missed payments before closure, that negative information persists for 7 years and can drag down your credit scores.

Even closing an old card you don’t use anymore could indirectly hurt your credit if it reduces the average age of your accounts or increases your overall credit utilization. Be cautious before closing unused cards that still have a positive history.

Tips for Removing Closed Accounts from Your Credit Report

If you have a closed account with negative marks that is hurting your credit, you may want to try removing it from your credit reports. Here are some options:

• Dispute errors – If the information is inaccurate, file disputes with each credit bureau to correct errors. This may lead to removal of incorrect accounts.

• Goodwill deletion – You can send goodwill letters asking creditors to remove accounts as a courtesy. Success is not guaranteed.

• Wait for automatic removal – Closed accounts eventually fall off your report automatically after the reporting timelines expire.

Don’t attempt to remove accounts that are closed in good standing, as these are helping your credit. Be patient and continue practicing good credit habits going forward.

How to Improve Your Credit with Closed Accounts

Here are some tips for managing closed accounts and improving your credit scores over time:

• Make all loan and credit card payments on time, every time
• Pay down balances on revolving credit to lower utilization
• Leave old accounts open unless there is a specific need to close them
• Monitor your credit reports and dispute any errors
• Limit new credit applications to only when needed

Staying on top of your payments, even for closed accounts, is critical for credit health. Keeping credit card balances low also helps improve utilization. Leave accounts open unless they have annual fees, for example, to preserve your overall credit history.

Be sure to check credit reports regularly and dispute inaccuracies in order to maximize your scores. Limiting new credit applications also helps. Following these tips can help you manage closed accounts properly and build your scores.

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