Credit Score Basics > How long do closed accounts stay on your credit report?

How long do closed accounts stay on your credit report?

Closed accounts stay on your credit report for six years regardless of why they were closed. Open accounts, meanwhile, will remain on your credit report indefinitely.

You might believe that once a loan or other credit agreement is settled and closed, it will no longer be reported to the credit reference agencies (Experian, Equifax, and TransUnion).

This is not true. An account is considered closed when the agreement ends, such as when a loan has been repaid, a bank account shut down, or a credit card paid in full and cancelled. However, your activity while the account was active, as well as the reason why it was closed, will stay on your credit report so that lenders can see how reliable you have been in the past.

If I close an account myself, how long does it stay on my credit report?

When you close an account yourself, for example when you pay off a loan in full, the lender sends the information to the credit reference agencies (CRAs) they work with.

Once the CRAs receive this information, they will mark the account as "closed" or "settled" in your credit report, where it will stay for the next 6 years.

Even if you closed the account and paid everything in full and on time, you may not ask the CRAs to remove it from your credit report. They do not have that authority.

How long do defaults stay on my credit report?

A credit agreement terminated because you missed multiple payments is called a default and counts as a closed account. The difference is that the lender closed the account because you didn't stick to the loan terms rather than a friendly goodbye.

For this reason, future lenders will see a defaulted account quite negatively, as you can imagine.

In any case, a default also stays on your credit report for six years.

The good news is that after these six years, both the account and the default market will be removed from your credit report.

This doesn't mean it's completely gone from your credit history.

There are three ways in which the impact of a default can last longer than six years.

First, any future lender has the right to ask you if you ever defaulted on a loan—and you have an obligation to tell them, even if they can't see this on your credit report.

Second, just because an account was closed because of a default doesn't mean that the debt is gone—you still need to pay it. If you don't, the lender might sell this debt to a third party, and you may find yourself with a new account with a repayment plan showing up in your credit report.

Finally, either the old lender or the third party may sue you, which can result in a CCJ (County Court Judgement) being added to your credit report. A CCJ will also stay for six years after the date it was issued—which might be later than the date your account was closed.

Do closed accounts impact my credit score?

Depends. Accounts where any debts have been paid in full have a positive impact on your credit score. But defaults and CCJs can hurt your credit score quite a bit.

According to Experian, a default can reduce your credit score by as much as 350 points—that's out of 1000. A CCJ can take another 250. This means that if you're taken to court because of a default, you could see your score drop from a "perfect" 999 to 450 within months.

There are things you can do to reduce the negative impact of a default, though:

• Add a Notice of Correction to your credit report. This gives you a chance to tell your side of the story. Other lenders might understand if they know that you couldn't make repayments because of illness or redundancy.
• Pay the debt as soon as you can. Even if you can't erase the default, a paid one will show as "satisfied" or "settled" on your credit report. This will tell lenders that you don't avoid your financial responsibilities.
• Keep working on your credit score. Try downloading a credit-building app like Wollit, which reports your monthly subscription as loan repayment, helping you rebuild your credit history and repair your credit score.

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