How Long Does a Closed Account Stay on Your Credit Report?

A “closed account” on a credit report refers to a credit line or loan that is no longer active, whether paid off, charged off by a creditor, or voluntarily closed. These accounts are part of an individual’s financial history. Their duration on a credit report varies by account type and payment status. Federal regulations govern how long both positive and negative financial information can be displayed.

Reporting Durations for Closed Accounts

The Fair Credit Reporting Act (FCRA) sets guidelines for how long information remains on a credit report. Accounts closed in good standing, like paid-off loans or credit cards with a zero balance, can stay for up to 10 years from the date of last activity. This continued presence can be beneficial by showcasing a history of responsible payment behavior.

Negative information, including late payments, collections, charge-offs, and repossessions, generally remains on a credit report for seven years. This period typically begins from the date of the first missed payment, known as the original delinquency date. Even if paid or settled, the negative mark usually remains for the full seven-year period from that date.

Bankruptcy filings have specific reporting periods. A Chapter 7 bankruptcy, involving liquidation, can remain for up to 10 years from the filing date. A Chapter 13 bankruptcy, involving a repayment plan, typically stays for seven years from its filing date. Public records, such as civil judgments and tax liens, generally do not appear on credit reports anymore.

How Closed Accounts Affect Your Credit Score

Closed accounts influence a credit score while present on a credit report. Accounts closed in good standing, like a paid-off mortgage or auto loan, contribute positively to payment history and credit history length. These are factors in credit score calculations, demonstrating a reliable financial past. Closing a credit card might temporarily increase credit utilization if other card balances rise, but the positive payment history still benefits the score.

Closed accounts with negative marks, such as late payments or defaults, can damage credit scores. The impact of these derogatory marks lessens over time, even before the account falls off the report. As the negative account ages, its influence on the score diminishes, though it remains visible.

When accounts fall off a credit report, their effect on the credit score changes. For negative accounts, removing the derogatory mark can lead to a significant improvement in the credit score. For positive accounts, the impact on the score is minimal if other positive accounts are present. Credit scores are also influenced by credit utilization, new credit inquiries, and the mix of credit types.

Reviewing Your Credit Report

Regularly reviewing your credit report is important for managing financial health and ensuring accuracy. Individuals are entitled to a free copy once every 12 months from each of the three major credit bureaus: Equifax, Experian, and TransUnion. Reports can be accessed through AnnualCreditReport.com.

When examining a credit report, verify details related to closed accounts. This includes:
Account type
Reported status (e.g., paid, charged off)
Date the account was opened and closed
Date of last activity or delinquency

Ensuring these details are accurate helps maintain the integrity of your financial record.

If inaccuracies are discovered on a credit report, federal law grants consumers the right to dispute incorrect information. Disputing errors involves contacting the credit bureau that reported the information, and potentially the business that supplied it. Credit bureaus are required to investigate disputes and correct or remove inaccurate or unverifiable information, typically within 30 days.