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Why Are Closed Accounts Still on My Credit Report?

Closed accounts, such as paid-off loans, may remain on your credit reports for up to 10 years.
Nov. 21, 2018
Credit Score, Personal Finance
Why Are Accounts That Have Been Paid Off Still on My Credit Report?
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Paying off a loan feels great. But being finished with a loan — or closing a credit card account — doesn’t mean the loan or credit card is finished with you. It could be on your credit report for years.

That’s great news if you paid on time. But if you didn’t, your credit missteps can linger long after that loan is off the books.

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Why do closed accounts stay on your credit report?

Your credit report is a detailed document that lists information about your history with handling borrowed money. You have three credit reports — one from each of the major credit bureaus — and the bureaus get the data about your credit accounts from your lenders. That data is used to calculate your credit scores, which are then used to make lending decisions.

In addition to personal information, like your name and address, your reports list both positive and negative information about how you manage credit. (The reports can look daunting; here’s our guide to how to read them.) For instance, if you always pay your auto loan on time, it will be listed as an account in good standing. On the other hand, if you’ve paid late, this will be noted, too.

It’s a common misconception that your credit report includes only information about your active accounts.

It’s a common misconception that your credit report includes only information about your active accounts. Unless you have a very limited credit history, your credit report is probably full of data about closed accounts, like loans and credit cards you paid off years ago.

If you have closed credit card accounts, for instance, your report will also indicate whether the account was closed by you or by the account issuer. You might close an account because of fees or poor service; an account issuer might close one because of default, late payments or inactivity.

Your score is not affected by who closed the credit card account.

Your score is not affected by who closed the credit card account. However it is affected by late payments and credit utilization, and those can be a reason for, or result of, a credit card being closed.

How long do closed accounts stay on your credit report?

How long the closed account will stay on your credit report depends on how you handled the payments.

If you paid as agreed month after month until a loan was paid off, for example, it will remain on your credit report for up to 10 years from the time it was closed.

If you defaulted or had late payments, that information can stay on your credit report for as long as seven years.

If you defaulted or had late payments, that information can stay on your credit report for as long as seven years. The same goes for foreclosures, short sales and most other negative information.

The only derogatory mark that can stick around longer is a Chapter 7 bankruptcy, which will remain on your credit report for up to 10 years. Assuming that the loan you’ve recently repaid was in good standing, it’s actually a good thing that it didn’t drop off your credit report as soon as you made your final payment. You’ll continue to get “credit” for it for years to come.

How long will a paid-off account take to show up on your report?

It can take one or two billing cycles for a loan or credit card to appear as closed or paid off. That’s because lenders typically report monthly. Once it has been reported, it can be reflected in your credit score. You can check your free credit report on NerdWallet to see when an account is reported as being closed.