How Long for Closed Accounts to Be Removed From Credit?

Credit reports record an individual’s financial behavior, detailing credit accounts and payment histories. A “closed account” signifies a credit account, such as a credit card or loan, that is no longer active or available for new transactions. These accounts appear on a credit report regardless of whether they were paid off, charged off, or became inactive for other reasons. Understanding how closed accounts are handled on credit reports is important.

Understanding Credit Reporting Durations

The Fair Credit Reporting Act (FCRA) sets guidelines for how long information remains on a credit report. Most negative credit information, including late payments, collection accounts, and charge-offs, remains on a credit report for up to seven years. This seven-year period begins from the date of the original delinquency, even if the account was subsequently closed.

Bankruptcies have distinct reporting periods. A Chapter 7 bankruptcy, which involves liquidation of assets, can stay on a credit report for up to 10 years from the filing date. In contrast, a Chapter 13 bankruptcy, which involves a repayment plan, remains on a credit report for seven years from the filing date.

Public records like tax liens and civil judgments were largely removed from credit reports by major bureaus in 2017 and 2018. These public records do not appear on credit reports today. For accounts closed in good standing, such as paid-off loans or credit cards with a positive payment history, the information can remain on a credit report for up to 10 years from the date of closure. This positive historical data contributes to a longer credit history.

How Closed Accounts Affect Your Credit Score

Closed accounts continue to influence a credit score, with the impact varying based on the account’s payment history. Accounts closed in good standing can benefit a credit score. This positive history contributes to the average age of accounts and demonstrates a pattern of responsible financial management.

Conversely, closed accounts with negative marks, such as late payments or charge-offs, continue to negatively affect a credit score until they are removed from the report. The severity of this impact depends on factors like the recency and nature of the negative information. While these accounts are closed, their past performance remains relevant to credit scoring models.

Correcting Inaccurate Credit Report Information

Consumers have the right to dispute inaccurate or outdated information on their credit reports. This process involves contacting the three major credit bureaus—Equifax, Experian, and TransUnion—and, if necessary, the original creditor. The initial step is to obtain a copy of your credit report, review it for errors related to closed accounts, and gather supporting documentation.

Once errors are identified, a dispute can be submitted to the credit bureau, typically online or via mail. Credit bureaus are required to investigate disputes within 30 days of receiving the request. This timeframe can extend to 45 days if additional supporting documentation is submitted during the investigation or if the dispute follows a free annual credit report request.

In very limited circumstances, a goodwill letter may be considered for a single, isolated late payment on an otherwise perfect payment history for a closed account. This requests a courtesy removal of the negative mark from the creditor. However, creditors are not obligated to grant such requests, and this option is not effective for removing valid, multiple, or severe negative accounts.