What Does Closed Account Mean in a Credit Report?

A closed account on a credit report means you had a loan account that you or the lender closed. The history of a closed account remains on a report for seven to 10 years, depending on whether it was favorable.

Some people mistakenly believe that closing a credit account eliminates it from their history. However, you can't wipe away negative information by canceling the account. An account with no negative history remains on your report for up to 10 years after you close it. Negative information, such as charge-off reports, remains on your account for up to seven years after your first missed payment.

Lenders may also spot additional terms related to closed accounts. A charge-off account, for instance, typically shows as paid or unpaid. Charge-offs occur when a lender writes off the debt after 120 to 180 days. You still owe the money, though. If you pay the balance, your report indicates that payment, and you look more favorable to lenders. The phrase "paid, closed" is normally followed with the number of days your payment was past due. Even when you pay off a closed account, the item still shows under the "potentially negative items" header in your report until the account's history is removed.