Can closed accounts be removed from your credit report?
Your credit report is essentially a timeline of your financial decisions. It provides lenders with the important information they need to evaluate whether you’re likely to repay a loan on time. This includes a summary of the total amount of debt you’re carrying, the amount of time you’ve had your credit lines and your history of on-time payments.
While it makes sense that a credit report would include all active accounts, many people are surprised to see that it also includes accounts that have been closed for years. If you’ve made all your payments on time, these accounts aren’t hurting anything — they may even improve your credit.
However, if your old accounts show a history of late payments or defaults, there’s a good chance they’re dragging down your credit scores. In this case, you may want to look into having them removed from your credit report.
How closed accounts affect your credit score
Knowing which factors influence your credit score can help you decide which closed accounts might be worth removing. Your FICO credit score, which is the most common model used by creditors, is based on the following five factors:
- Your payment history: Whether you’ve made the minimum payments on time. This makes up 35 percent of your score.
- Your credit utilization ratio: How much debt you carry compared to how much revolving credit (like credit cards) you have. This accounts for 30 percent of your score.
- The average length of your credit history: The time your credit accounts have been open. This makes up 15 percent of your score.
- New credit: Applying for new credit may temporarily lower your credit rating. This accounts for 10 percent of your score.
- Your credit mix: How much debt you carry in different categories, such as mortgage loans and credit cards. This accounts for 10 percent of your score.
The three credit bureaus — Equifax, TransUnion and Experian — compile your credit information. Credit-scoring companies then use it to calculate your credit score.
As a result, a closed account that shows a history of on-time payments may continue to boost your credit score slightly for up to 10 years after the account was closed. On the other hand, closed accounts that show late payments, missed payments or balances going to debt collections can negatively impact your credit score for up to seven years.
When to remove a closed account from your credit report
You do not need to remove a closed account from your credit report if it is in good standing. However, you may want to take some steps to remove a closed account that is negatively impacting your credit score.
How to deal with negative closed accounts
If a closed account is hurting your credit score, you have a few options for trying to remove this old debt from your credit report. However, removal isn’t guaranteed unless the account contains a true error, as it ultimately depends on each credit bureau’s policies.
Option 1: Formally dispute inaccuracies on your credit report
Many consumers are surprised to learn how common it is for credit reports to contain inaccurate information. A 2021 Consumer Reports study (the latest available) found that more than a third of volunteers noted errors in their credit reports. Most errors are simple, like a wrong middle initial or address, and don’t negatively affect your credit. However, some mistakes can negatively impact your credit.
To dispute errors on your credit report, including inaccuracies about closed accounts, you need to contact the credit bureau(s) reporting the error and ask them to correct the record. In addition to your contact information, you’ll want to include the following in your dispute:
- The account number for the account in question
- A written explanation of the incorrect information and why it’s wrong
- A copy of your credit report with the incorrect information highlighted
- Any documents that prove your dispute is valid, such as receipts of payment
Credit reporting agencies are legally required to investigate your claim, usually within 30 days, and notify you of their response.
According to the Consumer Financial Protection Bureau (CFPB), you should also contact the creditor who reported the information. For example, if your Experian credit report shows a late credit card payment, you should contact both Experian and the credit card company that reported the late payment to make sure all records are correct.
If the credit bureau determines the account doesn’t belong to you, it will likely be removed from your report. However, for other types of errors, the account may stay on your report with corrected information. With the correction made, the account may actually improve your credit rather than lower it.
It’s also important to note that this process is not limited to closed accounts. You can dispute any incorrect information you find on your credit report by following the same steps.
Option 2: Ask the creditor for a “goodwill” removal
If the information on your closed account is accurate but it’s lowering your score, you can try requesting its removal by sending the creditor a goodwill letter.
Goodwill letters are requests to have information removed from your credit report. They’re typically used when a borrower has missed a single payment due to unexpected and unavoidable consequences. You could use the letter to ask for the closed account to be removed completely, or you could ask for the negative marks to be removed from that record.
While you may get the result you’re hoping for, there are no guarantees.
When seeking a goodwill removal, there’s no need to contact the credit bureaus directly, as they won’t remove accurate information upon request. However, if your creditor agrees to your goodwill request, they can ask the bureaus to remove the negative information from your report. But keep in mind that the bureaus may not agree.
Again, this method is not limited to closed accounts. If you have an active account with a negative mark, you might contact the creditor and ask if they’re willing to remove the negative as an act of goodwill. The worst they can do is say no.
Option 3: Wait for the information to disappear on its own
Closed accounts on your report will eventually disappear on their own. Generally, negative information on your reports is removed after seven years, while accounts closed in good standing will disappear from your report after 10 years.
If you’re curious about which accounts are still on your report or want to monitor the information on your reports over time, it’s easy to get a copy of your credit reports. Federal law allows you to request a free weekly credit report by visiting AnnualCreditReport.com.
When to consider credit repair services
If you’re feeling overwhelmed by the idea of filing disputes with the credit bureaus or writing goodwill letters to creditors, you can consider hiring a credit repair company to handle it. These companies may also offer additional services, such as credit score monitoring, identity theft insurance and sending cease-and-desist letters to debt collectors.
Credit repair companies won’t dispute accurate information, and they can’t do anything to improve your credit that you can’t do yourself. However, if you don’t have time for DIY credit repair (and have room in your budget to hire someone) hiring a company may help. You may also find some benefit in working with experts who may have established relationships with creditors or credit bureaus and more experience disputing errors.
Unfortunately, with so many Americans struggling with credit score issues, credit repair scammers have emerged to take advantage of people who need help. If you decide to hire assistance, choose your credit repair company carefully.
The bottom line
There’s no need to remove closed accounts in good standing from your credit report. They can positively influence the average length of your credit history and your on-time payment rate, helping to boost your credit score until they naturally fall off your report.
If you believe an old account is pulling down your credit score, you can take some steps to try to remove it. When the account is not yours or the information is inaccurate, file a dispute with the credit bureau(s) reporting the error. For accurate but negative information, a goodwill letter to the creditor may help you get it removed.
Keep in mind that while removing old, negative accounts may give your credit score a quick little boost, it typically takes years to build good credit. Responsibly managing your debt and making payments on time can positively impact your credit well into the future.
