How Long a Closed Account Stays on Credit Report
Many people make the mistake of thinking that closing a credit card will remove it from their credit report. Only, it doesn't. Your credit report provides a complete picture of your credit history and that means reporting both open and closed accounts. There may be some good news if you’re hoping for a closed account to eventually disappear from your credit report.
What Happens When You Close a Credit Card
When you close a credit card, it doesn’t fall off your credit report right away. If you're still making monthly payments on a credit card balance, your payment history will continue to be updated each month until the balance is paid off and the credit card issuer stops sending monthly updates for that account. Any payments late by 30 days or more will be updated on your credit report and included in your credit score.
Once the account is paid off, it still doesn’t fall off your credit report. Instead, your credit report will be updated to show a zero balance for the account.
The account status for a closed credit card will be reported as closed, even when you're still making payments on the balance. The status may indicate that the account was closed by you, the cardholder, or the credit card issuer, depending on which of you closed the account. A closed account will have the same impact on your credit, regardless of who closed the account. If your account was closed with a delinquency, like a 90-day late notice or a charge-off, that will show on your credit report, too.
How Long a Closed Account Stays on Your Credit Report
The length of time a closed credit card stays on your credit report depends on whether the account was closed in good standing. A negative closed account, like a charged-off credit card, will remain on your credit report for seven years. That's the maximum amount of time most negative information can be included on your credit report.
If your account was closed in good standing, there is no law requiring it to be removed from your credit report in a certain time period. It could stay on your credit report indefinitely, but will likely be removed ten years after it was closed based on the credit bureau's guidelines for reporting closed accounts.
It's not a bad thing that a closed account still remains on your credit report, depending on how the balance and status of the account. Closed accounts generally hurt your credit score when you have a negative account status or a high credit card balance. An account closed in good standing, however, may have a positive impact on your credit score for as long as the account is included on your credit report.
You might want to scrub your credit report of all closed accounts, but you can only have inaccurate or outdated information removed from your credit report. If this is true for any of your closed accounts, submit a dispute with the credit bureaus to have the account removed from your credit report.