Since credit reports can be used to determine credit scores, it’s not surprising that people want the best credit reports they can get. After all, credit scores can determine eligibility for a loan or line of credit, as well as the interest rate assigned to new credit.
Part of seeking the best possible credit report includes, for some, the desire to remove closed accounts from their credit reports. But can it be done? Keep reading to find out.
Why (and How Long) Closed Accounts Remain On Credit Reports
Companies who utilize credit scores in their decision making want to see how credit has been handled in the past as well as in the present. Closed accounts can help with this. Here’s how credit reporting company Experian explains it:
“Experian keeps positive accounts on your credit report longer in order to give you credit for making payments responsibly … Even after they are closed, accounts that show they were always paid on time will help you establish a strong credit history and boost credit scores, so keeping them on your report is beneficial.”
If a closed account is negative, however, you might wish to see it removed from your credit reports. In this case, consumers already catch a bit of a break. That’s because negative closed accounts drop off of credit reports three years sooner than positive closed accounts. But if you really want to see that closed account off of your credit report, there are a few options you may want to consider trying.
How to Remove Closed Accounts From Your Credit Report
If You Paid the Debt
Paid off closed accounts remain on your credit reports for seven or 10 years, but if you want yours removed sooner, you could try a “goodwill letter.”
A goodwill letter is one you write to the creditor asking them to remove the negative information, such as a record of late payments. The assumption is that you have an otherwise positive history with them and can point to the negative items being isolated incidents.
This might not be effective on closed accounts since the creditor wouldn’t likely be continuously reporting anything to the credit reporting companies. But depending on your situation, you may decide that it is worth it to try. Understand either way that the creditor is under no obligation to remove or stop reporting accurate information to the credit reporting companies.
Some of the elements of a goodwill letter may include the following:
- A clear and friendly tone
- Details about why there were late payments or other negative items on your account
- Proof that you’ve had an otherwise positive history with that financial institution
- An explanation about why it’s important to you to have the data removed now
Want to see this in action? Personal finance blog The Balance has a sample goodwill letter here.
[Read our comprehensive guide to credit repair]
If You Still Owe the Debt
If you’re hoping to have a closed account you still owe on removed from your credit report, one option you may want to consider is something called a “pay for delete” letter. This is a letter offering to settle the debt in exchange for the removal of it from credit reports.
This can be trickier than a goodwill letter, however, since creditors aren’t required to stop reporting accurate information to credit reporting bureaus. Therefore, if you wouldn’t have otherwise settled the debt, then you could end up doing so without getting the results you wanted on your credit report.
Some of the elements of a pay for delete letter may include the following:
- The desire to settle the debt, but not a promise to do so
- A caveat that you’re not agreeing that you owe the debt
- An offer to settle the debt for a certain amount in exchange for the creditor doing what they can to remove it from your credit reports
- A request for written proof that they will comply within a certain timeframe
You can see what this might look like in a letter format by viewing a sample pay for delete letter from The Balance here.
If the Account Data is Inaccurate
If the closed account you wish to have removed from your credit report contains inaccurate data, you can dispute it. That might not result in the entire account being removed from your report unless the account is one that you never opened or authorized. It should, however, help to have the inaccurate data get removed from your credit report.
That said, a credit report dispute isn’t the appropriate step to take if you know the closed account and the data about it are all accurate.
Closed Accounts Might Stay on Your Credit Report
If you want an account with a negative credit history to be removed from your credit reports, you should know that the credit reporting agencies aren’t necessarily required to comply. According to the Fair Credit Reporting Act (FCRA), consumer reporting agencies are required to:
“Adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this title.”
None of that dictates that an account has to be removed because it’s closed, since accuracy is the name of the game. Therefore, reporting agencies would have to remove or correct inaccurate accounts or data, but not accounts that accurately capture data within a predetermined time frame. In this case, here’s how the FCRA determined “outdated information”:
“In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.”
Creditors and credit reporting agencies are required to comply with the rules as outlined by the FCRA. You can try to have closed accounts removed from your credit report, but there’s no guarantee it will work.