When Do Closed Accounts Drop Off Your Credit Report?

A “closed account” on your credit report signifies a credit account that is no longer active for new charges. This can occur for several reasons, such as a consumer paying off a loan, closing a credit card, or a creditor closing an account due to inactivity or delinquency. Information related to these accounts remains on credit reports for specific periods.

Understanding Closed Account Reporting

Accounts closed in good standing, such as paid-off loans or credit cards with a history of on-time payments, can remain on credit reports for up to 10 years from the date of account closure. This positive information can contribute favorably to a consumer’s credit history.

Conversely, closed accounts with negative information, like those with late payments or accounts closed with an outstanding balance, also remain on credit reports. The Fair Credit Reporting Act (FCRA) dictates that most negative items can be reported for up to seven years from the date of the original delinquency. Bankruptcies are an exception, with reporting periods extending up to 10 years. The “drop-off” refers to the removal of these entries from the credit report, which occurs automatically once the mandated reporting period expires.

Specific Timelines for Negative Information

The duration negative information remains on a credit report is specific to the type of derogatory mark, starting from the date of the first missed payment. This date, often called the original delinquency date, is crucial for determining when an item will be removed.

Late payments stay on a credit report for seven years from the date of the delinquency. This applies even if the account is brought current or subsequently closed. For instance, a 30-day late payment reported in June 2022 would drop off in June 2029.

Collection accounts remain on a credit report for seven years plus 180 days from the date of the original delinquency with the original creditor. This timeframe applies regardless of whether the collection account is paid or remains unpaid. Similarly, charge-offs, which occur when a creditor deems a debt uncollectible and writes it off, stay on a credit report for up to seven years from the first missed payment that led to the charge-off.

Bankruptcies have distinct 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. A Chapter 13 bankruptcy, involving a repayment plan, stays on a credit report for seven years from the filing date.

Previously, judgments and tax liens were reported on credit reports. However, most civil judgments and all tax liens are no longer included on credit reports. While these public records may still exist in other databases, they do not appear on consumer credit reports from the three nationwide bureaus.

Checking and Correcting Your Credit Report

Consumers can obtain a free copy of their credit report once every 12 months from each of the three major credit bureaus: Equifax, Experian, and TransUnion. This can be done through AnnualCreditReport.com. It is possible to request all three reports at once or space them out throughout the year to monitor credit activity more frequently.

When reviewing a credit report, check for inaccuracies, especially concerning closed accounts that should have dropped off or those with incorrect dates of delinquency. Errors can include wrong names, addresses, incorrect payment dates, or accounts that were not opened by the consumer. Identifying such discrepancies is a key step in maintaining an accurate credit history.

If an inaccuracy is found, consumers have the right to dispute the information with the credit bureaus. The dispute process involves gathering supporting documentation to substantiate the claim. Disputes can be submitted online, by mail, or by phone directly to the credit bureau reporting the error. The credit bureau is required to investigate the dispute and notify the consumer of the outcome. If the investigation confirms an error, the item will be removed or corrected on the report.