What is a closed account on a credit report?

Written by: Credit Karma Staff
• Edited by:Amy Kalin, Senior Editor, Credit & Debt
• Updated •6 min read • Leer en español
Frustrated young woman staring at a computer and wondering, "Why is my account reported as closed?"Image: Frustrated young woman staring at a computer and wondering, "Why is my account reported as closed?"

In a Nutshell

A closed account on your credit report isn’t necessarily a problem. Accounts can be closed for several reasons — some routine, some negative and some due to error. If you’re concerned about potential effects of a closed account on your credit scores, you can take steps to review your reports and address any inaccuracies.
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You might worry if you notice a closed account on your credit reports. But before assuming the worst, remember that creditors can close accounts for multiple reasons — and not all are negative.

You may have requested the closure, paid off or refinanced a loan, or your issuer may have closed an inactive account. In other cases, an account could be closed after late payments or because of a reporting error.

Whatever the case, it’s important to make sure what’s being reported is accurate so your credit isn’t affected inadvertently. You can check your credit reports for closed accounts daily on Credit Karma with VantageScore 3.0 scores and reports from two of the three main credit bureaus: TransUnion and Equifax.

Why closed accounts may be on your credit report

There are several reasons an account might be reported as closed. Some may need your attention, while others aren’t cause for alarm.

  • You requested it: If you canceled your account and received confirmation it was closed, it should appear as “closed” on your credit reports. A closed account in good standing will typically stay on your report for 10 years.
  • You paid off or refinanced a loan: Paying off a loan usually closes the account. Refinancing pays off your current loan with a new one, so you may see the old loan listed as closed (and a new one added).
  • Your creditor closed it because of inactivity: If you don’t use a card for a long time, your issuer may close the account. To help prevent this, consider making a small purchase occasionally on the card to keep active.
  • Your creditor canceled your account because of delinquencies: If you fall behind on payments, your lender may close your account, and the negative payment history for could stay on your report for up to seven years.
  • Credit bureau error: If you believe the account in question should be listed as open, you can file a dispute to correct the error. Conversely, if you believe an account marked open should be reported as closed, you can also file a dispute. 

How a closed account might affect your credit

The effect of an account closure depends on several credit factors, including how much of your available credit you’re using, the length of your credit history, the status of the closed account and the accounts you still have open.

Your credit utilization may increase

Your credit utilization rate is the portion of your credit that you’re using compared to your credit limit. If a revolving account like a credit card is closed, your total available credit will often decrease. 

When that happens, your utilization may increase, which may in turn lower your credit scores. For instance, the VantageScore 3.0 model weights your credit utilization as 20% of your score.

Experts typically recommend keeping credit utilization under 30%, though under 10% will help your scores even more.

Your credit history length could shorten

Credit history length is another factor used to calculate credit scores — the longer the better. Older accounts that are closed in good standing can remain on your reports for up to 10 years, helping your average account age. 

But keep in mind that when those accounts fall off your reports after that time, that may cause your average age to decrease, which could temporarily lower your scores.

VantageScore 3.0 weighs credit age and type of credit as 21% of your score. 

Your credit mix may change

Using a mix of different types of credit can help your credit scores. So if an installment account (such as a car loan) falls off, leaving only revolving accounts — or vice versa — your credit scores might drop.

Can you remove closed accounts from your credit history?

In general, accurate closed accounts can’t be removed from your credit history. If a closed account is inaccurate, you can dispute the item with the credit bureaus and the furnisher (the lender or creditor that reported the information). 

Provide documentation that supports your claim. If the investigation confirms an error, the bureaus should correct or remove the inaccurate information.

A closed account in good standing will continue to help your length of credit history for up to 10 years. 
Accounts closed with negative information, such as delinquencies, typically remain for about seven years. You can monitor your credit reports to make sure closed accounts fall off when they’re supposed to — and take action if they don’t.

What to do if you find a closed account on your credit report

What you should do next depends on whether you know why the account was closed, and whether the information is correct.

  • No action required. If you asked the creditor to close the account or you paid off a loan, there’s nothing more to do.
  • Contact your lender. If you don’t know why the account shows as closed, the creditor may have an explanation. If your creditor closed the account, you can ask them to reopen it, but they don’t have to.
  • File a dispute. If the lender didn’t close the account or you believe they closed it in error, you can file a dispute with the credit bureaus. Credit Karma’s Direct Dispute™ tool lets eligible members dispute errors on their TransUnion credit report directly from the Credit Karm app. If you spot an error in your TransUnion report on Credit Karma, you can go to the dispute center, select the account, choose the reason and submit the dispute to TransUnion. For Equifax or Experian items, you’ll need to dispute directly with those bureaus and the creditor. The Federal Trade Commission’s guidance on credit disputes can help. 

Next steps: How to recover if your account is closed

If you’re worried about your credit scores dropping after an account is closed, consider these tips.

  • Open a credit-builder account. If an account was charged off or closed for delinquency, a credit-builder loan or program like Credit Builder from Credit Karma Money™ may help you establish positive payment history, a step toward rebuilding your credit.
  • Reduce balances on remaining revolving accounts. If an issuer closed a credit card account, lowering balances on remaining credit cards can reduce your utilization rate, potentially boosting your scores.
  • Monitor your credit reports regularly. You can review your Equifax and TransUnion credit reports for free on Credit Karma, along with your VantageScore 3.0 credit scores, any time and as often as you like with no impact on your scores. You can also go to annualcreditreport.com to request your reports from all three bureaus, including Experian — once a week for free.

FAQs about closed accounts on credit reports

Are closed accounts on a credit report bad?

Not necessarily. A closed account in good standing can stay on your reports for up to 10 years and may help your length of credit history while it remains. A closed account with negative information (like late payments) typically remains for up to seven years and can affect your scores during that time — generally less so as time passes.

How do I remove a closed account from my credit report?

You usually can’t remove accurate closed accounts. But if the closed account is inaccurate — for example, if the status, balance or dates are wrong — you can file a dispute with the credit bureaus and the company that provided the data. If the error appears on your TransUnion report viewed in Credit Karma, you can use Direct Dispute™ to submit the dispute through the Credit Karma app. For items with Equifax or Experian, dispute directly with those bureaus and the company that provided the information.

Should I pay on a closed account?

If a closed account still has a balance, you’re generally responsible for paying it until it’s paid off, even if the account isn’t available for new charges. If a closed account was sent to collections, paying it may not remove the entry from your reports, but it could update the status and may help over time, especially with certain scoring models that consider paid collections differently.