What Does “Closed Account” Mean on Your Credit Report?

A closed account on your credit report generally refers to a credit card, loan, or another form of credit that can no longer be used to make new charges. This can happen for various reasons, such as the cardholder deciding to close the account or the issuer closing it due to inactivity or missed payments.

How Long Do Closed Accounts Stay on Your Credit Report?

Closed accounts in good standing can remain on your credit report for up to 10 years. If the account had negative information, such as late payments, this information typically falls off after seven years, but the account itself can still be reported for up to 10 years.

Are Closed Accounts on Your Credit Report Bad?

Whether a closed account is good or bad for your credit score depends on the account’s payment history. A positive payment history can help maintain good credit scores, while a history of late payments can negatively impact your score. Additionally, closing an account can affect your credit score by altering your credit utilization ratio, credit mix, and the average age of your credit accounts.

How to Remove Closed Accounts From Your Credit Report

If the information about a closed account on your credit report is accurate, it cannot be removed. However, if you believe the information is incorrect or outdated, you can dispute it with the credit bureaus. You may also request the creditor to remove the account, although they are not obligated to do so.

The Bottom Line

A closed account on your credit report can indirectly affect your credit score. It can impact your credit utilization ratio, credit mix, and the average age of your credit accounts. However, a closed account with a positive payment history can continue to benefit your credit score for up to 10 years.

To stay on top of your credit, regularly check your credit reports and monitor any changes. If you need assistance with managing your credit or have any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team of experts is here to help you navigate your financial journey.