Do Closed Accounts Stay on Your Credit Report?

A credit report is a detailed record of your financial history, showing how you manage debt and credit obligations. It compiles information about your borrowing activities, including credit cards, loans, and other bills. Lenders, landlords, and some employers use this document to assess your financial reliability. Understanding your credit report is important for maintaining financial health, as it influences your ability to secure loans, housing, and favorable interest rates.

Duration of Closed Accounts on Your Credit Report

Closed accounts remain on your credit report for a period determined by their status. Accounts closed in good standing, such as a paid-off credit card, typically remain for up to 10 years from the closure date. This includes fulfilled mortgages or other loans, showcasing responsible borrowing.

Conversely, closed accounts with negative marks, such as late payments, defaults, or collections, are retained for up to seven years. This seven-year period begins from the date of the first delinquency that led to the derogatory status, not the account closure date. For example, a missed payment leading to a charge-off starts the seven-year countdown from that initial late payment. A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the filing date, while a Chapter 13 bankruptcy remains for seven years.

Impact of Closed Accounts on Your Credit Score

Closed accounts, whether positive or negative, influence your credit score through various factors. Accounts closed in good standing contribute positively to your credit history, demonstrating responsible debt management. This historical data strengthens the “payment history” and “length of credit history” components of credit scoring models. Payment history, for instance, can account for 35% of your FICO score and up to 40% of a VantageScore.

Derogatory closed accounts negatively affect your credit score, especially when recent. Their impact gradually diminishes over time, even as they remain visible on your report for seven years. An older negative item carries less weight than a newer one, but still contributes to lenders’ risk assessment.

The way an account is closed also plays a role in credit scoring. For example, if a consumer closes a credit card, it reduces total available credit, which can increase the credit utilization ratio if balances remain on other cards. A higher utilization ratio, the amount of credit used compared to total available credit, can negatively affect scores. Conversely, if a lender closes an account due to inactivity or default, these circumstances are noted and factored into scoring models.

Reviewing Closed Accounts on Your Credit Report

Regularly reviewing your credit report is important to ensure the accuracy of your financial history, including closed accounts. You are entitled to a free copy of your credit report weekly from each of the three major nationwide credit bureaus—Equifax, Experian, and TransUnion—through AnnualCreditReport.com. This centralized website is the only federally authorized source for these free reports.

When examining your report, look for how closed accounts are listed. Verify the account status, ensuring it correctly indicates “closed” rather than “open” if no longer active. Confirm the stated date of closure and check the payment history up to that point.

Your credit report displays details such as the original credit limit, payment history leading up to closure, and the account’s closed status. This review helps understand which accounts influence your credit profile and confirms all reported information is factual and consistent with your records.