A credit report reflects your payment history on your accounts so lenders can see your financial timeline. Accounts will stay on your credit report for a set period of time depending on the payment history of the account even after they have been closed and paid off.
When you decide to close an account such as a credit card, it does not remove that account from your credit report immediately. People may think that by closing an account it will remove it from your credit report—it does not.
When Are Closed Accounts Removed from Credit Reports?
The length of time that a closed account on your credit report remains will depend on your payment history. A closed account that has no negative history stays on your credit report for 10 years. The positive information associated with this account will continue to influence your credit for that time frame. A closed account that contains negative information remains on your credit report for 7 years.
For example, negative account information, such as late payments or a charge off, stays on a credit report for 7 years from the original delinquency date. Accounts that have negative information are deleted sooner than accounts with no negative history. This way you can still rebuild your credit quicker if you have had issues in the past.
5 Ways to Remove Closed Accounts from a Credit Report
Removing a closed account from your credit report can be difficult. This is especially true if it the account in question has negative information tied to it.
If the information is accurate, it can limit your options. If there are mistakes then you have more options that could work in your attempt to remove negative information.
Here are some suggestions that could help you remove a closed account from your credit report:
1. Check That Account Is Closed
First, make sure that you closed the account, to begin with, because the lender or credit provider may still see it as open. If the account is still open and in good standing, having that open credit limit can help lower your utilization ratio and help improve your credit scores. If the account is still open and has negative information, you want to make sure the account is paid and then you can decide if you want to close it.
2. Submit a Dispute
If you feel there is a mistake on your credit report, you can submit a dispute with the credit bureaus. Credit providers that report information to the credit bureaus must report accurate information on accounts. The Fair Credit Reporting Act states that you have the right to an accurate credit report and people can dispute errors with the credit bureaus.
Lenders that provide account information want to report accurate information, so it can be hard to get a closed account removed unless there is a mistake which can happen. There are several ways to dispute information on your credit report by starting the process online or from your mobile device, over the phone or through the mail.
3. Goodwill Request
Sometimes a "goodwill" request to remove a closed account through a letter or a phone call made to the credit provider can help your cause. Credit providers are not required to help you and their decision can be influenced by whether the account in question has positive or negative information associated with it.
If the account has negative information, such as a late payment, you can ask the credit provider to forgive that information through a personalized case, such as a medical procedure preventing you from paying on time, explaining your reasoning why it should be removed. It will help if you have documentation to help support your cause, state that you've been a customer of theirs for many years or have another account with that credit provider.
4. Wait
The last option is to simply wait for the closed account to come off your credit report. If you decide to wait, you can still start to improve your credit history by making payments on time on time and keeping low balances on your accounts to improve your credit score.
Again, most closed accounts will come off your credit report in 7 to 10 years depending on whether there is negative or positive information associated with the accounts in your payment history.
There is also the possibility that a credit provider has made a billing error, and while that is rare, it is always worth checking your credit report to confirm the information listed.
Understanding what potential lenders see on your credit report is an important step towards increasing the chances to be qualified later on for a new credit card or car loan. If there is incorrect information listed, you can fix it sooner rather than later.