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What Do “Closed” and “Paid in Complete” Imply on Credit score Studies?

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Your credit report contains a lot of information about each of your credit accounts. The terms “closed” and “paid in full” on your credit report mean you no longer have a credit account open, and that it has been paid in full.

What Does”Closed” Mean on a Credit Report?

Each of your credit accounts will indicate whether it’s currently open or closed.

  • Revolving accounts: A closed revolving account, such as a credit card, is an inactive card that you can’t use for new purchases or other types of transactions.
  • Installment accounts: A closed installment loan, such as a personal loan or auto loan, could be a loan that you paid off in full. Or, if you fell behind on loan payments, the account might be closed and transferred when it’s sent to collections.

Accounts may have additional comments that describe the circumstances around the closure. For example, with a credit card, your report may say whether the card was closed because it was inactive, if the creditor closed the account for a different reason or if you asked the issuer to close the account.

What Does “Paid in Full” Mean on a Credit Report?

An account that’s paid in full is a closed account with a zero balance. The terminology can depend on which credit report you review, where you requested the report and your account’s details.

For example, if you paid off a loan or closed a credit card and you never missed a payment, your credit report might say:

  • Closed/never late
  • Closed; was paid as agreed
  • Paid and closed

You might see different language if you previously missed payments and then brought your account current and paid it off—such as “paid; past due 30 days“—or if the account was paid in full after it was refinanced, charged off or sent to collections.

How Long Do Closed Accounts Remain on a Credit Report?

A closed account can remain on your credit report for up to 10 years and may continue affecting your credit scores. However, the timeline depends on whether the account is in good standing or past due when it’s closed.

Accounts Closed in Good Standing

A closed credit card or loan that was in good standing when it was closed will stay in your credit file for 10 years. In other words, you were current on your payments and either paid off the loan or the credit card was closed and you paid the balance.

If you previously missed a payment, the late payment will be removed from your credit history after seven years. The rest of the account can still stay on your reports for up to 10 years if you brought it current before the closure.

Accounts Closed When They’re Past Due

If you missed payments and your account was closed when it was past due, the entire account will be removed from your credit report seven years after the original delinquency date.

The original delinquency date is the first late payment in the series of late payments that led to the account closure. As a result, the account might be removed from your credit report sooner than seven years after it was closed.

What Does “Settled” Mean?

Settled means you came to an agreement with your creditor or a collections agency to pay less than the full amount owed.

You won’t owe additional money on a settled debt, and the account could be updated on your credit report to show it’s paid in full and has a zero balance. But creditors that review your credit report will know that you paid less than the full balance.

Settling or paying off collection accounts can be better for your credit scores than having an outstanding past-due balance on an account. And newer credit scoring models ignore collection accounts that are paid in full. However, settling your debt has serious drawbacks and is still worse for your credit than repaying a loan or credit card on time and in full.

Check Your Credit Report for Free

You can review your credit reports to see all the open and closed accounts that are still in your credit file. With a free Experian account, you can see your Experian credit report anytime. Your account also includes free credit report monitoring, FICO® Score updates and real-time alerts about important changes in your report.

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