How Long Do Closed Accounts Stay on Your Credit Report?

Credit reports serve as a record of an individual’s financial behavior. They contain information about borrowing and repayment activities. Closed accounts are a common feature on credit reports. Understanding how these accounts are reported and their impact is important for managing credit effectively.

Types of Closed Accounts and Their Reporting

A “closed account” on a credit report signifies a credit line or loan that is no longer active for new charges or borrowings. Accounts can become closed for several reasons, reflecting different financial situations. For instance, a consumer might request to close a credit card they no longer use, or a loan account, such as an auto loan or mortgage, automatically closes once it has been fully paid off. Lenders can also initiate the closure of an account due to inactivity, or because of frequent missed payments or exceeding credit limits.

Regardless of the reason for closure, a closed account does not immediately disappear from a credit report; it continues to be listed alongside open accounts. The status of a closed account is clearly indicated, often as “closed,” “paid,” or “charged off,” providing context to its history. Common types of accounts that frequently appear as closed include credit cards, personal loans, student loans, auto loans, and mortgages. The way these closed accounts appear on a report, including their payment history, significantly influences their ongoing impact.

Removal Timelines for Negative Closed Accounts

The Fair Credit Reporting Act (FCRA) establishes specific timeframes for how long negative information associated with closed accounts can remain on a credit report. These timelines are designed to allow individuals to rebuild their credit over time. For common negative items like late payments, the information generally stays on a credit report for up to seven years from the date of the original delinquency. This means the clock starts ticking from the first missed payment that led to the late status, not from when the account was closed or paid.

Accounts that have been charged off, meaning the creditor has written off the debt as unlikely to be collected, typically remain on a credit report for seven years from the date of the original delinquency that led to the charge-off. Similarly, collection accounts, which arise when a debt is sent to a third-party collection agency, are usually reported for seven years and 180 days from the original delinquency date of the account that went into collection. These timeframes are mandated by federal law.

Bankruptcies also have defined reporting periods, depending on the type filed. A Chapter 7 bankruptcy, which involves liquidation of assets, can remain on a credit report for up to 10 years from the filing date. In contrast, a Chapter 13 bankruptcy, which involves a repayment plan, typically remains for seven years from the filing date. Major credit bureaus stopped reporting most civil judgments and tax liens in 2017.

Handling of Positive Closed Accounts

In contrast to negative entries, closed accounts with a history of positive financial behavior are treated differently on a credit report. Accounts closed in good standing, such as paid-off loans or credit cards with no missed payments, generally remain on a credit report for a longer period. This positive information can stay on a report for up to 10 years from the date the account was closed.

These accounts contribute positively to a credit history by demonstrating a track record of responsible borrowing and timely repayments. Even after closure, they continue to factor into calculations of credit age, which is a component of credit scoring models. Maintaining positive closed accounts on a report helps to illustrate a consistent history of financial reliability, which can benefit an individual’s creditworthiness.

Credit Report Accuracy and Dispute Process

Ensuring the accuracy of information on a credit report is a responsibility for consumers, as errors can negatively impact financial standing. Individuals are entitled to a free copy of their credit report from each of the three major nationwide credit reporting agencies—Experian, Equifax, and TransUnion—once every 12 months, accessible through AnnualCreditReport.com. Reviewing these reports periodically allows for the identification of any inaccuracies, including those related to closed accounts.

If an inaccuracy is identified, the Fair Credit Reporting Act provides a process for disputing the information. The dispute should be initiated directly with the credit reporting agency that is listing the error. This can typically be done online, by mail, or by phone, and it is helpful to provide supporting documents that substantiate the claim. Once a dispute is filed, the credit bureau is generally required to investigate the item within 30 days, though this can extend to 45 days if additional information is provided by the consumer during the investigation.

The credit bureau then informs the original creditor or data furnisher of the dispute, who must also investigate the claim. If the information is found to be inaccurate or cannot be verified, it must be corrected or removed from the credit report. Should the dispute with the credit bureau not resolve the issue, consumers also have the option to contact the original creditor directly to dispute the information.