How Long Do Closed Accounts Stay on Your Credit Report?

A credit report details an individual’s financial history, including borrowing and repayment activities. Lenders, landlords, and some employers use it to assess financial responsibility. Understanding the information within a credit report, especially concerning closed accounts, is important for managing one’s financial standing. This article explains how long various types of closed accounts remain on a credit report and their effects.

How Long Accounts Remain on Your Report

The duration a closed account stays on a credit report largely depends on whether the account was in good standing or contained negative information. Positive closed accounts, such as paid-off loans or credit cards closed with a history of on-time payments, can remain on a credit report for up to 10 years from the date of closure. This presence can contribute positively to the overall credit history by demonstrating responsible financial behavior.

Conversely, closed accounts with negative marks, including late payments, charge-offs, collections, repossessions, or foreclosures, remain on a credit report for seven years. This seven-year period begins from the date of the original delinquency, which is the first missed payment that led to the negative status, rather than the date the account was closed or sent to collections. This rule applies to charge-offs, collection accounts (paid or unpaid), repossessions, and foreclosures.

Bankruptcy filings have distinct reporting periods. A Chapter 7 bankruptcy, which often involves liquidation of assets, remains on a credit report for 10 years from the filing date. A Chapter 13 bankruptcy, which involves a repayment plan, stays on a credit report for seven years from the filing date. An account being “closed” on a credit report does not mean it has been “removed”; its history continues to be reported for the specified durations.

The Impact of Closed Accounts on Your Credit Score

Closed accounts can continue to influence a credit score as long as they are present on the credit report. A positive closed account, such as a credit card that was consistently paid on time and then closed by the consumer, can still contribute positively to the credit history. The payment history and the age of the account, even if closed, continue to be factored into credit scoring models, potentially benefiting the overall score by reflecting a long history of responsible credit management.

Conversely, a negative closed account, such as one with a history of late payments or a charge-off, continues to harm the credit score until it eventually falls off the report. Even if the debt associated with a negative account has been settled or paid, the record of the initial delinquency and the account’s negative status persists, impacting the score. The severity of this negative impact lessens over time, but it remains a derogatory mark.

Closing a credit card account, particularly one with a high credit limit, can have an unintended negative effect on a credit score. This is because it can increase the credit utilization ratio, which is the amount of credit used relative to the total available credit. If other credit lines are then used more heavily, the reduced overall available credit can lead to a higher utilization ratio, which may lower the credit score. The act of closing an account does not erase its history or its ongoing influence on the credit score; the account’s past performance continues to be a factor.

Ensuring Accuracy of Closed Account Information

Regularly reviewing credit reports from the three major credit bureaus—Equifax, Experian, and TransUnion—is a good practice for financial oversight. These reports provide a comprehensive overview of credit history, including information on closed accounts. Federal law allows consumers to obtain a free copy of their credit report from each of these bureaus annually through AnnualCreditReport.com.

Should any inaccuracies or outdated information be identified on a credit report, particularly concerning closed accounts, consumers have the right to dispute these errors. The dispute process involves contacting the specific credit bureau (or bureaus) that show the incorrect information. It is advisable to provide supporting documentation that substantiates the claim of inaccuracy. Both the credit bureau and the entity that provided the incorrect information are obligated to investigate the dispute and correct any verified errors.