Removing Closed Accounts from Your Credit Report

Closed accounts on your credit report may be bad or good for your credit score, depending on the details. Explore your options if a closed account has a negative impact.

By Derek Moran | American Express Credit Intel Freelance Contributor

5 Min Read | November 30, 2020 in Credit Score



Closed accounts can appear on your credit report for a number of reasons and aren’t always a bad sign.

Depending on the specifics of the account, credit score shifts can be positive or negative.

Information about closed accounts on your credit report isn’t there forever and can even be removed – under certain circumstances.

No matter how closely you pay attention to your financial history, closed accounts can appear on anyone’s credit report. It may be a credit card you haven’t used in many years, a loan you paid off, or even a mistake by a creditor or the credit bureau. Whatever the reason, a closed account can affect your credit score positively or negatively depending on the specifics of the account. 


But there are often ways to manage closed accounts – or even remove them from your credit report. 


What Is a Closed Account on Your Credit Report?

Simply put, a closed account is one that has been shut off from future credits or debits. Many different types of accounts can be closed, like credit cards and auto loans. Checking, savings, and brokerage accounts can also be closed. There are several reasons why an account might be closed:

  • Paying off/refinancing a loan: If you pay off a loan or replace it with a new one, the original obligation is gone and the account is terminated.
  • Inactivity: Your creditor could close a dormant account like an unused credit card. This usually takes a year, minimum, but could be much longer in certain cases – for example, a credit card you pay the annual fee for but don’t use.
  • Lateness: A lender might close your account because of delinquencies, late payments, or default.
  • You close the account: Some people to choose to cancel a credit card they’re no longer using or close a checking or savings account that charges fees.
  • Mistakes: Errors happen. One of the bureaus or your lender could have incorrect or fraudulent information.

It’s easy to forget about an account after it’s closed but that doesn’t remove it from your credit report.


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

Generally, how long a closed account stays on your credit report depends on the standing of the account when closed. Accounts closed in good standing can remain for 10 years and are often beneficial to have on your credit score. This is because reliable payment history is the most influential factor in the FICO credit scoring model.1 There’s usually no reason to remove accounts like these. 


Information about negative closed accounts – ones with defaults or late payment histories – lingers for less time: seven years, by law. The only negative information that can stay for longer is a Chapter 7 bankruptcy, which stays on credit reports for 10 years.2


How Closed Accounts Affect Your Credit Score

Understanding how closed accounts affect your credit score can seem a bit contradictory, at times, to what you might think. For instance, paying off an auto or home loan is considered a good thing, financially. But it can result in a temporary dip in your score because it reduces the variety of credit types in your mix. Lenders usually prefer borrowers who have learned to handle a good mix of loans and credit lines. 


If you don’t use a credit card, it may seem logical to close the account. But closing a credit card would lower your overall credit limit, which can raise your credit utilization and that, in turn, would negatively affect your credit score. Experts recommend keeping credit utilization under 30% but people with the very highest credit scores generally keep it under 10%. 


Closed accounts with remaining balances – like a canceled credit card account with an outstanding balance – can also affect your score negatively. If the account defaulted, it could be transferred to a collection agency. Paying off closed accounts like these should improve your credit score, but you might not see an increase right away.


How to Get Rid of Closed Accounts on Your Credit Report

There are a few ways to go about getting a closed account off your credit report. If the closed account is an error – or fraudulent – the Fair Credit Reporting Act requires that the credit bureaus and information providers correct the information in your credit report. This is a pretty straightforward process you can learn more about by reading “How do I Get Something Off My Credit Report?” and “How to Dispute Your Credit Report at All 3 Bureaus.” 


If the closed account is verifiable and legitimate – and has negative information like an outstanding balance or a history of late or missed payments – you still have a few options to remove it:

  • Pay for delete: This entails striking a deal where if you pay the remaining balance, in installments or in full, the lender removes the negative information from your credit report. Lenders aren’t obligated to do so, though, which is why it’s a negotiation.
  • Goodwill deletion: You request that the information furnisher removes the negative item out of pure goodwill. This option isn’t always successful, but it’s worth pursuing because the furnisher may remove the negative item if you provide them with good enough reason to believe that the negative behavior won’t recur in the future. For instance, if you have an otherwise clean credit history.
  • Wait: While not the quickest solution, it’s always successful. But 7-to-10 years can be too long for most people to wait, especially if you need to boost your credit relatively quickly. If you do choose to wait, though, the information just goes away.


The Takeaway

Closed accounts can help or hurt your credit score. It’s important to take the time to review your credit report regularly and verify your account information. If closed accounts are hurting your score, you may have options to remove the information from your credit report. Taking a proactive approach to your credit history and using the tools available to update or correct your credit report can help you in the long run.

Derek Moran

Derek Moran is a freelance writer and researcher whose work focuses on digital marketing and financial services.


All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

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