How Long Do Closed Accounts Stay on Your Credit Report? Can They Affect Your Credit?

How Long Do Closed Accounts Stay on Your Credit Report? Can They Affect Your Credit?
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Point Editorial

Opening a credit account means that you can close it too, and each action influences your credit report differently. 

Closed accounts, like a credit card account or a loan, remain in your file for several years, though the precise time frame depends on the account’s history. 

Read on to learn more about closing credit accounts, how it affects your credit, and how to go about removing it from your history. 

How long do closed accounts stay on your credit report? 

The majority of people think that once a credit account is closed, it disappears from your credit report, but that isn’t true. 

Credit accounts that were closed while in good standing will stay on your file for up to 10 years. Accounts that display negative information related to your credit will remain on your file for up to seven years. This can include missed payments or late payments, repossessions, foreclosures, and collection accounts or unpaid debts. 

Hard inquiries remain on your record for two years. This is when banks or other lenders check your credit score, usually for loan or credit card applications. It’s best not to submit multiple applications, especially within a brief period, because lenders will see them.

If you file for bankruptcy, it will remain in your file for up to 10 years as well, but this depends on the specific type of bankruptcy. A Chapter 7 or 11 bankruptcy will be present on your file for 10 years. The former means that your assets are sold off to pay back lenders, while the latter means that the conditions of your loan are reevaluated so that you don’t lose all of your possessions. In comparison, a Chapter 13 bankruptcy can be removed from your report sooner, since this option permits you to catch up on your installments through a revitalized payment schedule. 

Why do closed accounts stay on credit reports? 

Both open and closed credit accounts stay on your credit report because they are a crucial factor in calculating your overall score. 

Your report contains a lot of detailed information about your financial behavior, including your expenses and, most significantly, how you handle any money you've borrowed. 

The three major credit bureaus, Experian, Equifax, and TransUnion, constantly amalgamate this data to produce your score. For consumers, the credit reporting agencies are there for educational purposes so you can stay abreast of the state of your financial health. For creditors, the information generated is used to help them determine creditworthiness in regard to significant ventures, like applying for a mortgage or a car loan. 

How closed accounts affect your credit

Your credit history displays both beneficial and adverse data. As a result, this establishes an accurate image of you as a consumer, which can aid banks and external lenders in their decisions to enter business with you. 

If you make all of your monthly payments in a timely fashion, that will boost your credit score. Payment history accounts for 35 percent of your total score. 

Closing a credit account means that you’ll no longer have access to that credit limit. This action will shorten the length of credit history, since all of the payments you’ve made with that account will also disappear. But if you still owe an outstanding balance on that account, it can’t be officially closed until you pay it off, which will continue to impact your credit. 

Alongside repayment history, how much credit you use, the types of credit you use, and a mix of active credit accounts make up considerable portions of your score.

What you do with your credit now will influence you gaining approval for other financial ventures down the road, like taking out a mortgage, a student loan, or a car loan. 

Actively prioritizing your financial payments and taking personal responsibility are two ways to ensure that your credit remains in good standing. To establish healthy habits, you must surround yourself with the best tools — tools that build your wealth so that you won’t have to worry about insufficient funds for monthly installments — but tools that help protect that wealth as well. 

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When should you remove an account from your credit report?

Don't try to remove an account that illustrates positive payment habits. Ventures that generate good credit are highly impactful, as they symbolize responsible credit habits. 

You may wish to cancel the account because of high fees or poor service. It might be closed by the lender due to too many late payments, inactivity over a substantial period, or if the account is defaulted, meaning that you have broken agreed-upon terms regarding credit utilization and maintenance. 

Always double-check your report before deciding to do anything. Fortunately, you’re entitled to a free credit report from either of the three bureaus once a year. Afterward, you can submit a dispute if any negative information is still present. 

Additionally, your report will also indicate whether you or an external party closed the account. 

How to remove an account from a credit report

Step 1: Dispute inaccuracies. Once you check your credit score, you can dispute any inaccuracies in your record before making big decisions, like closing accounts. Investigating and then scrubbing that information from your report takes a bit of time, so do this as soon as it becomes necessary. It typically takes 30 days to resolve a claim. 

You can file a dispute with the credit bureaus online or through the mail. You’ll have to provide your name, account number, the information you are disputing, and any supporting documents. 

Step 2: Write a goodwill letter. Ultimately, this is an extremely polite way of asking a creditor to remove a closed account from your report. It isn’t the same as a dispute because it doesn’t usually require supporting evidence about why an account was closed, but still helps cover all your bases. Unfortunately, the creditor has no reason to access your request through these means.

Step 3: Wait it out. Sometimes, you just have to be patient.

Closed accounts don’t remain on your file forever. If you can’t have the account removed, you can focus on improving your credit and know that the record will eventually disappear.

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Point Editorial
A group of writers, thinkers, & designers from varying backgrounds — all part of the Point Card team. Sharing perspectives on concepts in design, finance, and culture through an everyday lens.
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