Content of the material
What Happens When You Close an Account?
When you close an account, it's no longer available for new transactions, but you're still required to pay off any balance outstanding by paying at least the minimum owed each month by the due date.
After the account is closed, the account status on your credit report gets updated to show that the account has been closed. For accounts closed with a balance, the creditor continues to update account details with the credit bureaus each month. Your credit report will show the most recently reported balance, your last payment, and your monthly payment history.
How Long Do Collection Accounts Stay On Your Report?
Paid or unpaid collection accounts can legally stay on your credit reports for up to seven years after the original account first became delinquent. Once the collection account reaches the seven-year mark, the credit reporting companies should automatically delete it from your credit reports.
If your collection account doesn’t fall off of your credit report after seven years, you can file a dispute with each credit bureau that lists it on your report.
Wait for Accounts to Drop Off
If you choose not to take steps to remove closed accounts, you’ll be happy to hear that these closed accounts won’t stay on your credit report forever. Depending on the age and status of the account, it may be nearing the credit-reporting time limit for when it will drop off your credit report for good. If that’s the case, all you might have to do is wait a few months for the account to fall off your credit report, and then for your credit report to update.
Most negative information can only be listed on your credit report for seven years from the first date of delinquency.
If the closed account includes negative information that's older than seven years, you can use the credit report dispute process to remove the account from your credit report.
No law requires credit bureaus to remove a closed account that's accurately reported and verifiable and doesn't contain any old, negative information. Instead, the account will likely remain on your credit report for ten years or whatever time period the credit bureau has set for reporting closed accounts. Don't worry—these types of accounts typically don't hurt your credit score as long as they have a zero balance.
The Plot Thickens
Now that you know 3 ways to remove closed accounts from your credit report, let’s go back to our original example. Here’s a little twist to her scenario…
If the creditor cannot find a record of the account when the credit bureaus ask them to investigate it (via her dispute) then the credit bureaus will have to remove it from her credit reports.
The credit bureaus are not allowed to maintain information that is not verifiable.
Now, to the issue of her credit scores being punished because of having “too much available credit.”
The two credit scores that matter (FICO, VantageScore) actually reward you for having a large amount of unused credit card credit limits because it helps you maintain a lower debt-to-credit-limit ratio, which I’ve demystified in this article on credit card utilization.
In fact, if you look at the factors that influence the FICO and VantageScore credit scores, “Too much available credit” isn’t on the list.
So, I’m not sure what score type/brand you’re looking at but I wouldn’t get overly concerned about having too much available credit.
It’s not the potential for getting into debt that matters…it’s whether or not you’re actually in debt and how you manage the debt that matters.
Removing a Closed Credit Account by Phone
If you’d prefer to submit your dispute by phone, simply use the numbers below to get in touch with these credit reporting agencies:
- Equifax: 1-866-349-5191
- TransUnion: 1-800-916-8800
2. Determine the Account’s Legitimacy
While reviewing the collection listed on your account, make sure the debt belongs to you. If it doesn’t belong to you or you made on-time payments to pay it off, dispute the error to remove the collection from your report.
How to Get Collections off Your Credit Report
Getting collection activity off your credit report can help you accomplish credit goals like improving your score or qualifying for certain types of loans. Though there’s no one way to remove collections or guarantee you’ll get the exact outcome you are hoping for, it’s still good to know how to remove this information from your credit report whenever possible.
The good news is that it’s possible to remove this derogatory information, so here’s exactly what you need to know about removing collections from your credit report.
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