Many consumers believe that closing credit accounts they no longer want will remove the account from their credit record. Credit bureaus are required by law to include all correct and timely information on your credit report under the Fair Credit Report Act. 1 Only false or outdated information can be deleted from your credit report, or if the creditor agrees to do so. 2
What Happens When an Account Is Closed
When you cancel an account, it becomes unavailable for new transactions. However, you must still pay off any outstanding debt by paying at least the minimum amount due each month by the due date. The account status on your credit report is updated to signify that the account has been closed after it is closed. The creditor updates account details with the credit bureaus each month for accounts canceled with a balance. The most recently reported balance, your most recent payment, and your monthly payment history will be displayed on your credit report. Closed Accounts Can Be Removed From Your Credit Report A canceled account can hurt your credit score in some situations, especially if it was closed due to a delinquent, such as a late payment or, worse, a charge-off. 6 Payment history accounts for 35% of your credit score, and any late payments, even if made after the account was terminated, might lower your credit score. Removing the account from your credit report may increase your credit score.2018's The Balance
Removing a closed account from your credit report is not always straightforward, and it's only doable in certain circumstances. Suppose an account on your credit report is genuinely open but is wrongly recorded as closed. In that case, you can dispute it and have it listed as an open account. It will aid your case if you can show documentation of your account's status. It's possible that having a credit account recorded as closed (while it's genuinely open) is harming your credit score, particularly if the credit card has a balance. You can also challenge any other incorrect information about the terminated account, such as late payments received on time.Letter of Goodwill
A goodwill letter can be used to ask a creditor to remove a paid, closed account from your credit report. Creditors aren't obligated to comply with a goodwill request, no matter how sweetly you ask. Still, you might get lucky and discover one who is sympathetic.Delete for a fee
The "pay-for-delete" technique can help eliminate a canceled account from your credit record if it has a balance. 9 The pay-for-delete letter proposes complete payment in exchange for the account being removed from your credit report. Creditors are not required to cooperate once again. Some creditors and debt collectors will agree to a payment schedule to remove the account from your credit report. Your goodwill or pay-for-delete letter can be mailed straight to the creditor. In some situations, you may be able to make your request by calling the creditor first. Wait for the accounts to expire. If you don't make efforts to remove closed accounts, you'll be relieved to learn that they won't be on your credit report indefinitely. Depending on the account's age and status, it may be approaching the credit-reporting time limit for when it will be permanently removed from your credit report. If that's the case, you may need to wait a few months for the account to be removed from your credit report and for your credit report to be updated. Most wrong information on your credit record is valid only for seven years from the delinquency date. Suppose the closed account has terrible information that is over seven years old. In that case, you can challenge the account and have it removed from your credit report. There is no legal requirement for credit bureaus to remove a canceled account that has been accurately reported and verified and does not contain any outdated lousy information. Instead, the account will most likely remain on your credit report for 10 years or for however long the credit bureau has set for reporting closed accounts. Don't worry—as long as the amount on these accounts is zero, they won't damage your credit score.Most Commonly Asked Questions (FAQs)
What is a pay-for-delete letter, and how does it work A pay-for-delete letter is used to offer to pay off a negative account's balance in exchange for the debt being removed from your credit report. Although the creditor or debt collector is not compelled to comply with your request, it may be worthwhile to send it nevertheless. Suppose you send the request to a collection agency. In that case, you'll need to make a reasonable offer for them to consider settling. However, there's no way of knowing how much that is. It may not be worth sending a pay-for-delete letter if the item has been on your credit record for more than seven years. How do you go about disputing something on your credit report You must call each credit bureau and register a dispute to dispute an item on your credit report. You can file your grievance online, which is usually the quickest choice. You can also upload supporting documentation if you have it. You can also file a dispute by mail; if you do, use certified mail.