How to Get Closed Accounts Off Your Credit Report
Navigate the complexities of closed accounts on your credit report. Understand their impact, accuracy, and how to manage their long-term presence.
Credit reports detail an individual’s borrowing and repayment history, reviewed by lenders and landlords to assess financial responsibility. These reports often include information about closed accounts, which can raise questions about their ongoing impact.
Understanding Closed Accounts on Your Credit Report
A “closed account” on a credit report refers to a credit account, such as a credit card or loan, that is no longer active for new transactions. This can occur for various reasons, including the account holder paying off a loan, closing a credit card, or the creditor closing the account due to inactivity or payment issues. It is a common misconception that once an account is closed, it immediately disappears from a credit report; in reality, closed accounts, whether positive or negative, generally remain on the report for an extended period.
The duration a closed account stays on a credit report depends on its payment history. Accounts that were in good standing with a history of on-time payments when closed can remain on a credit report for up to 10 years. Conversely, accounts with negative information, such as late payments, collections, or charge-offs, typically stay on a credit report for up to seven years from the date of the original delinquency. For more severe negative events, such as bankruptcies, the reporting period can vary; a Chapter 7 bankruptcy generally remains for 10 years, while a Chapter 13 bankruptcy stays for seven years. Foreclosures also typically remain on a credit report for seven years from the date of the first missed payment that led to the foreclosure.
Accessing and Reviewing Your Credit Reports
Before taking any action regarding closed accounts, it is important to obtain and thoroughly review your credit reports. You are entitled to one free copy of your credit report every 12 months from each of the three major nationwide credit bureaus: Equifax, Experian, and TransUnion. These reports can be accessed through AnnualCreditReport.com.
When reviewing a closed account entry, scrutinize specific details for accuracy. Check the account number, account status (e.g., “closed,” “paid,” “charged off”), and the reported balance. Verify the payment history, ensuring that all payments are correctly recorded and that no late payments are inaccurately listed. Confirm the date the account was opened and the date it was closed, looking for any discrepancies that might suggest an error. Identifying these precise data points is the initial step in determining if a dispute is warranted.
Steps to Dispute Inaccurate Closed Account Information
If you identify inaccurate closed account information on your credit report, you have the right to dispute it. The Fair Credit Reporting Act (FCRA) mandates that credit bureaus and information providers correct inaccurate or incomplete information. You should file a dispute directly with each credit bureau that is reporting the incorrect information, as well as with the original creditor.
Disputes can typically be filed online, by mail, or over the phone. Filing online may be the fastest and most convenient method. When submitting a dispute, clearly explain what information you believe is wrong and why, providing copies of any documents that support your claim. This documentation could include payment records, account statements, or any correspondence acknowledging account closure.
Credit bureaus are generally required to investigate disputes within 30 days, although this period can extend to 45 days if additional information is provided during the investigation. After the investigation, the credit bureau must notify you of the outcome in writing. If the information is found to be inaccurate, the credit report will be updated, and the bureau should notify other nationwide credit bureaus to correct their records.
Impact of Accurate Closed Accounts on Your Credit
It is important to understand that accurate closed accounts, even those with negative payment history, generally cannot be removed from your credit report before their legally mandated reporting period expires. While these accurate negative entries will remain, their impact on your credit score typically diminishes over time as they age on the report. Older negative information has less influence on credit scoring models than more recent activity. Therefore, maintaining positive credit behaviors, such as making on-time payments on other accounts, becomes more important than focusing on removing accurate historical data.