When you close an account, it may not be removed from your credit report immediately. This is true whether the closed account is a credit card or an installment loan. Closed accounts stay on your report for different amounts of time depending on whether they had positive or negative history. An account that was in good standing with a history of on-time payments when you closed it will stay on your credit report for up to 10 years. This generally helps your credit score. Accounts with adverse information may stay on your credit report for up to seven years.
Adverse information is anything that a potential creditor might see as negative, such as late payments or accounts that go to collections. Both late payments and collections will fall off your credit report seven years after the date of the original delinquency. A common misconception is that a collections account will fall off a credit report once it’s been paid. Whether paid or unpaid, a collections account will stay on your credit report for up to seven years.
Bankruptcies stay on your credit report for different lengths of time depending on the type. A Chapter 7 or Chapter 11 bankruptcy will stay on your report for 10 years. A Chapter 13 remains on file for seven years. A Chapter 13 bankruptcy falls off a credit report faster because people agree to pay some of the debt back through a payment plan. However, if the repayment plan is not completed, it will remain on your report for 10 years.
Though hard inquiries aren’t a type of account, they occur when you apply for new credit. Hard inquiries will stay on your credit report for up to two years. Having too many inquiries in a short time period can negatively impact your credit score and may be a reason you get denied credit.
Here’s the good news: Closed accounts with a good history generally stay on your report longer than negative information. If you do have a derogatory mark on your credit report, time is the best healer—it will fall off your report eventually. To improve your long-term credit health, work on building good credit habits.