When Does a Closed Account Fall Off Your Credit Report?
Understand the duration of various closed account histories on your credit report and their ongoing effect on your financial profile. Learn how to review and manage this data.
Credit reports record an individual’s financial behavior, detailing how credit has been managed. They include information about accounts like credit cards, loans, and mortgages, reflecting both positive payment histories and instances of missed payments or defaults. Even after an account is closed, its information can continue to appear on a credit report for a specific duration, influencing one’s financial standing. Understanding how long different types of closed accounts remain on these reports is important.
Understanding Closed Accounts and Credit Reporting
A closed account is a credit account no longer active for new transactions. While new charges cannot be made, the account’s historical data, including payment history and balance information, remains part of your credit record. This data is collected and maintained by the three major credit bureaus: Equifax, Experian, and TransUnion. Lenders and other entities use this information to assess creditworthiness. A closed account can carry either a positive or negative history, contributing to your overall financial responsibility.
When Negative Information Falls Off
Most negative information, such as late payments, collections, or charge-offs, remains on a credit report for up to seven years. This period begins from the “original delinquency date,” which is the date of the first missed payment that led to the negative status and was never brought current. The impact of negative information on credit scores diminishes over time, even before removal from the report.
More severe negative events, like bankruptcies, have different reporting periods. A Chapter 13 bankruptcy remains on a credit report for seven years from the filing date. A Chapter 7 bankruptcy can stay on a credit report for up to 10 years from the filing date. Paid tax liens and civil judgments remain for seven years from their filing date.
When Positive Information Falls Off
Accounts closed in good standing remain on a credit report for a longer duration than negative items. This positive information can stay on a credit report for up to 10 years from the date of closure. These accounts are beneficial because they demonstrate a consistent history of responsible borrowing and timely payments, positively influencing credit history length and overall credit score.
Accessing and Reviewing Your Credit Report
Federal law provides individuals the right to obtain a free copy of their credit report from each of the three major credit bureaus—Equifax, Experian, and TransUnion—once every 12 months. This can be done through AnnualCreditReport.com. When reviewing these reports, carefully examine all listed closed accounts. Verify the accuracy of the account status, original delinquency dates for negative items, and payment history.
Correcting Errors on Your Credit Report
If inaccuracies are discovered on a credit report, individuals have the right to dispute them with the credit bureaus. The dispute process involves contacting the credit bureau reporting the incorrect information. Provide supporting documentation to substantiate the claim. Once a dispute is filed, the credit bureau is required to investigate the error within 30 to 45 days. If the investigation confirms an error, the information must be corrected or removed from the credit report.
Accurate negative information, even if impacting your credit score, cannot be removed prematurely from your credit report.