Dos And Donts Of Closing A Credit Card
There are good reasons for closing a credit card. Whether the temptation of using credit is leading you to constantly overspend and rack up interest, you have so many cards that youre losing track and missing payments, or you want to get rid of a card with a low limit and higher than normal interest rates, cancelling can be the right move.
If you plan on cancelling one of your credit cards, consider the following dos and donts to minimize the impact on your credit score.
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Use A Free Credit Monitoring Service
Apps such as and will show your VantageScore, which resembles your FICO score, any time you want to see it.
More importantly, you can set these apps to send a notification or a text message anytime someone applies for new credit in your name.
This provides a great first line of defense against identity theft.
A lot of credit card issuers will now show your FICO score on their apps or online platforms.
Discover, for example, offers this service. In this case, a big drop in your FICO could warn you about inaccuracies or fraud.
When To Negotiate With A Creditor
This likely won’t work if the charged-off account belongs to you and all the information being reported about it is accurate. In that scenario, you could try negotiating with the creditor or debt collector to update or remove the charge-off account from your credit file. This is called “pay for delete,” and essentially you’re asking for the account to be removed from your credit reports in exchange for a fee.
Pay for delete arrangements are legal under the Fair Credit Reporting Act, but there are a few things to know. First, creditors aren’t obligated to honor your request and remove charge-offs from your credit. So while you can ask for a pay-for-delete, there’s no guarantee that a creditor or debt collector will agree to it.
Second, if they do agree, you’ll likely need to pay the account in full. However, if an account has been delinquent for some time, the creditor may be willing to accept a settlement in which you pay less than the full amount. Either way, you’ll almost certainly have to pay something toward the debt.
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How Long Do Collection Accounts Stay On Your Report
Paid or unpaid collection accounts can legally stay on your credit reports for up to seven years after the original account first became delinquent. Once the collection account reaches the seven-year mark, the credit reporting companies should automatically delete it from your credit reports.
If your collection account doesnt fall off of your credit report after seven years, you can file a dispute with each credit bureau that lists it on your report.
You May Be Able To Remove Or Update Information About Student Loans If Its Inaccurate
May 27, 2021 |9 min read
If youâre wondering how to get student loans off your credit report, itâs important to know when thatâs possible and when itâs not. Generally, if the loan belongs to you, it will remain on your credit report.
You canât remove accurate information from your credit report. But if you notice an error on your credit report, you have the right to dispute it. Here are some things to know about removing student loans from your credit report, how long student loans stay on your credit report and ways to improve your credit score.
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 the rest arent cause for alarm.
- You requested it. If you wrote to your creditor, canceled your account and got acknowledgement that the account was closed, it should come as no surprise that it shows up as closed on your credit reports. Closed accounts in good standing will typically remain on your report for 10 years.
- You paid off or refinanced a loan. Paying off a loan usually closes the account. Since youve finished paying off your debt, youve fulfilled your obligation and the loan no longer needs to remain active. On the other hand, refinancing involves paying off your current loan with a new one, so you might see that your old loan is closed .
- Your creditor closed it because of inactivity. If you dont use your card for a long time, your credit card issuer may close your account. To prevent this from happening, you could try keeping one small monthly payment on accounts you want to keep active.
- Your creditor canceled your account because of delinquencies. If you fall behind on your payments, your lender may close your account. Keep in mind that negative payment history for these accounts may remain on your report for seven years.
- The credit bureau made a mistake. If this is the case and you have proof that the account should be listed as open, file a dispute to fix the error.
When It Comes To Your Credit Score Dont Sweat The Small Stuff
Remember that credit bureaus consider the entirety of your situation when determining your score, and not just which old accounts are still listed on your reports.
Further, the most important factors of your FICO score are your payment history and how much debt you owe. For that reason, you should focus most of your efforts on making sure your bills are paid on time and maintaining a credit utilization rate thats on the lower end of the spectrum, and preferably under 30%. Other ways to improve your credit score include refraining from opening or closing too many accounts and having a few different types of accounts on your reports on any given time.
Good credit is built slowly over the years, and youll have the best results if you focus on areas where you can have significant impact. Old accounts on your report may be inconsequential, but how you treat your credit now can impact your score for years to come.
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Understanding Why Its There
All too often, people assume that by paying off a creditor in full this automatically means it is taken off their credit report right away. This isnt true at all, as your credit report will show all your credit accounts, no matter if they are open or closed. What this could also mean is that you can potentially have accounts that have been closed sitting on your report for months, even years before you realize and do something about it.
Now where this closed account sitting on your credit report can hurt you is if the account had any delinquencies on it. It is just sitting there bringing down your entire score, regardless of the fact you cleared it up and paid it all off.
Get Free Credit Reports
Visit annualcreditreport.com to order or download a free credit report from each of the three major credit bureaus.
These reports wont show your credit score, but you can check them for inaccuracies and new credit applications you didnt make all of which affect your credit score.
Federal law gives you the right to one free credit report from each credit bureau each year.
Temporarily, because of the Covid-19 pandemic, you can get one free credit report from each bureau once a week.
This provision is scheduled to expire in April of 2021. After that, youll have access to a free credit report only once a year.
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How A Bad Credit Score Isbad
As pointed out formerly, a bad credit score is anything below 670. If you want to get more specific, a score ranging between 580-669 is considered fair, while anything in between 300 and 579 is considered bad. This is going off the FICO scoring thats most typically used.
Not sure what your credit score is? . Its free!
Having a bad score can stop you from doing a lot of things. This includes getting approved for much better credit cards, home loans, houses, individual loans, organization loans, and more.
Plus, any loans or credit cards you do get approved for will be much more costly . This is since lenders charge much greater rate of interest to those they deem high danger in order to offset the additional risk they feel theyre taking by loaning you money.
How do they get more expensive? By charging higher rate of interest. If you take out a $10,000, 48 month loan on a vehicle with a 3.4% interest rate, youll pay about $704 in interest over the course of the loan. If you took out that exact same loan with a 6.5% rate due to bad credit, you d pay about $1,376 in interest. Thats nearly double!
How Long Do Charge
A charge-off will remain on your credit report for seven years, and then its automatically deleted. For example, if you stopped making payments on one of your credit cards for six months, and it was marked as a charge-off on January 1, 2020, it would remain on your credit report until January 1, 2027.
Even if the statute of limitations on the debt expires after three or five years in your state, your credit report will still show the charge-off, and your credit score will suffer. Statutes of limitations protect you from legal action but not from bad credit or from phone calls from debt collectors.
Will My Credit Score Improve If I Pay The Charge
Some collection agencies may try to convince you paying off the full amount of your charge-off will restore your FICO score. This is not true. A paid charge-off will definitely look better to lenders who take the time to do manual underwriting, but it will have a minimal effect on your credit score. Also, paying off the charge-off wont automatically delete the entry from your credit report. Paying it off will not remove the charge-off from your account, either.
How Does A Charge
Once an account has been charged off, two things will likely happen:
- First, youre going to start receiving calls and letters from collection agencies attempting to collect the debt.
- Second, the account will be marked as a charge-off on your credit report.
A charged off account on your credit report will devastate your FICO score. A single charge-off can cause your to drop 100 points or more. Its a big deal.
In addition to your credit score dropping, youre also going to have a really difficult time getting approved for any new , mortgages, or auto loans. Lenders rarely extend credit to people with even one charge-off on their credit report.
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How To Get Rid Of Closed Accounts On Credit Report
Have you recently looked into your credit report only to find your rating is much lower than you assumed? There are all kinds of reasons a person can end up with a low credit score, which is why its so important to get your hands on your full credit report and investigate further. Often, a low score can be the result of creditors still appearing on your account that you have in fact paid off in full. Unless you take the steps to get rid of the closed account, it can remain there and continue to bring down your score.
So how exactly can you get rid of closed accounts on your credit report and thereby improve your credit rating? Lets take a closer look.
Get Your Student Loans Professionally Removed
In some cases, we recommend speaking with a Credit Repair professional to analyze your credit report. It’s so much less stress, hassle, and time to let professionals identify the reasons for your score drop.If you’re looking for a reputable company to increase your credit score, we recommend Credit Glory. Call them on or setup a consultation with them. They also happen to have incredible customer service.Credit Glory is a credit repair company that helps everyday Americans remove inaccurate, incomplete, unverifiable, unauthorized, or fraudulent negative items from their credit report. Their primary goal is empowering consumers with the opportunity and knowledge to reach their financial dreams in 2020 and beyond.
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Ask To Have Negative Entries That Are Paid Off Removed From Your Credit Report
You may have a series of late payments on your credit report, or perhaps an old collection account that’s since been paid off still shows up. If this is the case, ask to have them removed.
This step may take more time and effort on your end, but it could be worth it. Triggs suggests speaking to the collections agency, debt buyer or original creditor to remove a paid-off account from your credit report.
“You’d most likely have better results using this method with collection agencies or debt buyers versus the original creditor,” he says.
Try to convince them to not only show the account as paid, but to remove the account altogether, which could have a much bigger impact on your credit score. “Having even a paid collection account or paid charge-off on your credit report could deter creditors in issuing you future credit at all,” Triggs says.
Look For Negative Information In Your Credit History
You may not even know if you have a derogatory account in your credit history. So you should start by getting your free credit report.
You can get your from many different services. But by law, each of the three major reporting bureaus has to give you a free credit report each year. And during the coronavirus pandemic, consumers are entitled to free weekly reports through April 2021, via AnnualCreditReport.com, the official U.S. government website.
When you open your credit report, you can find a list of all derogatory accounts. These include any account with a late or missed payment.
Below is a sample screenshot showing a credit card account that has a 30-day late payment from July 2011. You can see that its a derogatory item from the color some reports show yellow and red boxes and we know that it is a 30-day late payment because the box says 30 in it.
Image: Eric Rosenberg
Look through your credit report and make a list of all negative information. Then compare to your records to make sure everything there is accurate.
If its not accurate, getting it removed is imperative. And if it is accurate, its harder to remove, but still possible.
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You Have Defaulted On An Account
An account is in default when the borrower has missed payments and the account is then closed by the lender. There is no set number of missed payments that result in a default being recorded. This is down to the individual lender, but when they believe a debt can no longer be recovered they record a default.
If a debt cannot be recovered many lenders sell the account to a debt collection agency. This will show negatively on your credit file and will remain on it for a period of six years from the default date, regardless of any settlement. After this time it is removed from your report automatically even if the full amount has not been settled.
Although a default will be removed from your report after 6 years the lender may still pursue you for the debt, unless the debt is statute barred. A statute barred debt is a debt which is seen as unenforceable as the creditor has not chased it in the period allowed. If you have not been chased for payment, have not made payment or signed any acknowledgement of a debt in writing for 6 years in England and Wales and 5 years in Scotland then it could be statute barred.
How Can You Dispute Credit Report Errors About Student Loans
The process for disputing credit report errors is generally the same whether itâs about a student loan or another account. It starts with checking from the three major credit bureausâExperianÂ®, TransUnionÂ® and EquifaxÂ®âto make sure all the information is accurate.
In most cases, disputing errors online is fastest. Experian, TransUnion and Equifax all have resources to walk you through the process. If you prefer to do it through the mail, the Federal Trade Commission has directions about how to dispute credit report errors and a sample letter you can reference.
Once you report the error, the credit-reporting bureau has to investigate your dispute within a certain period of timeâusually 30 daysâand report its findings to you. But if the bureau decides your dispute is frivolous or too vague, it doesnât have to investigate. You can learn more about what information to include with your dispute below.
The credit bureaus are also required to contact your lender or servicer to investigate your dispute. But as mentioned above, it may be a good idea to do it yourself. The FTC has a sample dispute letter to help with that, too. If doing things online or over the phone is easier, it may be worth reaching out to your lender or servicer to see if they offer those options.
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Impact Of Identity Theft On Your Credit Report
Identity theft occurs when someone steals your personal information and uses it to apply for new lines of credit. If these new accounts go into default, they will appear on your credit report and hurt your score.
Cleaning up your credit after identity theft can take anywhere from a day to several months or even years. The longer it takes you to realize someone stole your identity, the more difficult it will be to undo the damage. Monitoring your credit report will help you to stay on top of potential fraudulent charges.