Are Closed Accounts Removed From Credit Report?

If you’ve closed your account, you might be wondering whether your closed account will be removed from your credit report. We will explain the answer to this question in much detail below.

Are Closed Accounts Removed From Credit Report?

No, closed accounts such as credit card accounts, personal loan accounts, auto loan accounts, and other loan and revolving credit accounts are not removed from your credit report even if you’ve paid them off in full. Closed accounts in good standing remain on your credit report for 10 years from the date you closed the account, and accounts in bad standing because of negative marks, such as missed payments, will remain on your credit report for 7 years from the date you first became delinquent on the account. After the 7 or 10 years period is over, the account is automatically removed from your credit report.

If your account was in good standing and all payments were made on time, it will continue to have a good impact on your credit score so long as it remains on your credit report. On the other hand, if your closed account was not in good standing, meaning there were missed payments on your account, it will have a negative impact on your credit score even after the account is closed. As the account ages, its impact on your credit score will lessen until it’s ultimately removed from your credit report after 7 years.

How Does a Closed Account Appear On Your Credit Report?

Closed accounts appear on your credit report when a lender or creditor updates your account status with the three major credit reporting bureaus: Experian, Transunion, and Equifax. Your creditor or lender sends an update informing the credit bureaus that your account has been closed along with the history of the account.

If the account was paid in full, the credit bureaus are informed that the account has been closed with a $0 balance. For accounts in good standing, the account will not be removed from your credit report. Instead, it will appear under the closed accounts tab. If your account was closed in good standing, it will remain on your credit report for 10 years from the date that you closed the account.

On the other hand, if your account was in bad standing. Your creditor or lender will report the status of the account, including that it was closed with missed payments, also known as delinquency. The account will remain on your credit report from the date that you first missed a payment on the account, also known as the original delinquency date.

Closed accounts in good standing remain on your credit report for 10 years vs the 7 years that accounts in bad standing remain on your credit report because the credit bureaus to give your credit for making all of your payment responsibly. So, if a future lender or creditor checks your credit report, they will see the account that has all payments on time. The credit bureaus cut those who’ve missed payments some slack by only keeping the negative information on their credit report for 7 years instead of 10.

How Long Does a Closed Account Remain On Your Credit Report?

Good Standing – Accounts that are in good standing remain on your credit report for 10 years from the date that you closed your account. After the 10 year period, the account will automatically be removed from your credit report.

Not in Good Standing – Accounts that are not in good standing because they have a negative mark, such as a missed payment, remains on your credit report for 7 years from the date of your first delinquency (first missed payment). After the 7 year period, the account will automatically be removed from your credit report. If your account is not removed within 7 years, you can file a dispute with the credit bureau to have it removed from your credit report.

Can You Remove a Closed Account From Your Credit Report?

You can only remove a closed account, whether the account was in good standing or bad standing, from your credit report if there is an inaccuracy in the information that was reported on your credit report.

You can remove a closed account from your credit report by filing a dispute with the credit bureau showing the closed account. After you file a dispute, the credit bureau has 30 days to review the account you claim is inaccurate.

During the 30 day period, the credit bureau will conduct an investigation to determine whether the information (closed account) contains inaccuracies. If the investigation reveals that there is indeed inaccurate information, the account will be removed from your credit report.

However, if the investigation reveals that the closed account is accurate, the closed account will remain on your credit report for the prescribed amount of time (7 years for accounts with negative marks and 10 years for account closed in good standing).

So, unless you reasonably believe that the closed account contains inaccurate information, you should not dispute an item as disputing is unlikely to remove it from your credit report. If you really want to dispute an item, you can go ahead and do so as there is no penalty for disputing an item and it does not cost anything to do so. But, keep in mind that if the information is valid, it will most likely remain on your credit report.

How Do Closed Accounts Affect Your Credit Score?

If you closed an account that was in good standing, the account will continue to have a positive impact on your credit score. This is so because closing an account in good standing with a $0 balance means that you’ve made all your payments on time, never missing a payment. Your payment history makes up 35% of your credit score. So, having such an account will boost your credit score even after the account is closed. This is so because accounts in good standing remain on your credit report for 10 years from the date that you close them.

On the other hand, if you have an account that is not in good standing, meaning you’ve missed payments on the account, the account will negatively impact your credit score even after the account is closed. A closed account that has negative marks will remain on your credit report for 7 years from your first delinquency (first missed payment).

That said, as the closed account ages, its impact on your credit score will lessen until the closed account is ultimately removed from your credit report. Accounts in good standing are removed from your credit report and stop affecting your credit score after 10 years from the date you closed the account, and closed accounts with bad standing are removed from your credit report and stop affecting your credit score after 7 years from the date you first missed a payment on the account.

Frequently Asked Questions (FAQs)

1. What happens when you close a credit card account, personal loan accounts, or auto loan account?

After you close an account, people often believe that the account is removed from their credit report. However, close accounts, even paid off closed accounts, are not removed from your credit report. They remain on your credit report for a number of years.

2. Can I have a closed account removed from my credit report?

Yes, you can have an account removed from your credit report before the 7 year or 10 year mark only if you can successfully dispute the account with the credit bureaus. Disputes are often only successful if you can show that the information being reported on your credit report is not accurate.

3. Why is my closed account still being reported on my credit report?

Your closed account is still being reported on your credit report because closed accounts remain on your credit report for a number of years after the account is closed. Closed accounts that are in good standing are removed after 10 years, and closed accounts in bad standing are removed after 7 years from the first delinquency.

4. How do I remove a closed account from my credit report?

You can remove an account from your credit report if you can successfully dispute the account with the credit bureaus. Disputes are often only successful if you can show that the information on your credit report is not accurate. Disputing an item that you merely want off your credit report often does not work unless the information being reported is inaccurate.