When you close an account, it is no longer available for new transactions, but you are still obligated to pay any outstanding balance by paying at least the amount due each month by the due date.
What happens when you close an account?
After closing the account, the status of the account is updated in your credit report to show that the account has been closed. For accounts closed with a balance, the creditor continues to update the account details with credit bureaus each month. Your credit report will show the latest reported balance, the last payment, and the monthly payment date.
Removing closed accounts from your credit report
In some cases, a closed account can negatively impact your credit scores, especially if the account was closed due to missed payments or a bad settlement. A missed payment can lower your credit scores, even if the payment was missed after the account was closed.
Removing the account from your credit report could potentially improve your credit scores.
Removing a closed account from your credit report is not always easy and is only possible in certain circumstances.
If the account on your credit report is actually open but was incorrectly reported as closed, you can use the credit report dispute process to report it as an open account. Providing evidence of the status of your account will help your case.
A closed account on your credit report (when it is actually open) may affect your credit scores, especially if the credit card has a balance. You can dispute any other inaccurate information regarding the closed account, such as payments reported as late but were paid on time.
Goodwill letter
You can use a goodwill letter to request that the creditor remove a closed and paid account from your credit report.
Creditors are not obligated to respond to a goodwill request, no matter how kindly you ask, but you might get lucky and find one who is sympathetic to your request.
Pay-for-delete
For accounts that carry balances, the “pay-for-delete” strategy might help you remove a closed account from your credit report. A pay-for-delete letter offers full payment of the outstanding amount in exchange for removing the account from your credit report.
Again, creditors are not obligated to comply. Sometimes, some creditors and debt collectors may agree to the arrangement with payment as an incentive to remove the account from your credit report.
You can send a goodwill letter or pay-for-delete letter directly to the creditor by mail. In some cases, you might try calling the creditor first to make your request.
Wait for accounts to be removed
If you decide not to take steps to remove closed accounts, you will be glad to know that these closed accounts will not remain on your credit report forever. Depending on the age of the account and its status, the account’s proximity to the time limit for credit reporting may be when it is finally removed from your credit report. If so, you might just need to wait a few months for the account to be removed from your credit report, then update your credit report.
Most negative information can appear on your credit report for seven years from the date of the first delinquency. If the closed account includes negative information that is over seven years old, you can use the credit report dispute process to have the account removed from your credit report.
There is no law that requires credit bureaus to remove a closed account that has been accurately reported and verifiable and does not contain any negative outdated information. Instead, it is likely that the account will remain on your credit report for ten years or any length of time the credit bureau has set for reporting closed accounts. Don’t worry – these types of accounts typically do not affect your credit scores as long as they do not have a balance.
Questions
Frequently Asked Questions (FAQs)
What is a pay for delete letter?
A pay for delete letter is what you use to offer a settlement on a negative account in exchange for the debt being removed from your credit report. The creditor or debt collector is not obligated to comply with your request, but it may be beneficial to send it. If you are sending the request to a debt collection agency, you will need to offer enough to make it worthwhile for them to settle. There is no way to know what that amount is, but if you are close to the seventh year for the item to fall off your credit report, it may not be worth sending a pay for delete letter.
How can you dispute an item on your credit report?
To dispute an item on your credit report, you will need to contact each credit bureau and submit a dispute. You can submit your dispute online, which is usually the fastest option. If you have supporting documents, you can upload them as well. You can also dispute by mail; make sure to use registered mail if you do.
Was this information helpful?
Thank you for your feedback!
Source: https://www.thebalancemoney.com/how-can-i-remove-a-closed-account-from-my-credit-report-960399
Leave a Reply