Will a closed credit card hurt my credit score?

I had a question from Eric about a zero account balance on an old account that was closed on his credit report. Eric was concerned that it was still impacting his credit score even though it was no longer active.

The account on his credit file was “settled for less than full balance” but it was now being reported correctly with a zero balance. He was very concerned that it is pulling his credit score down and it is.

Although, probably not as much as he thinks it is, once you have an account with a zero balance and closed all the damage that’s been done has been done. The more time that goes by from the finial date reported on that account, the better! In a year or two, it’s probably having almost zero impact on Eric’s credit score. While initially it might have a bigger impact once that goes to zero paid and closed.

That “current” situation will still be an improvement over having it open and delinquent. The account will still have a negative impact on the score for that month, and a little bit less the month after that, and then a little bit less a month after that.

As the years go by it will have almost no impact at all and it could, in some weird crazy way, actually help Eric in the fifth, sixth or seventh year just before it falls off his credit report.

Just remember that if you do have an account that had some derogatory situation happen and you have other good accounts established, a very good base of accounts with a long credit history, you can close the derogatory accounts.  As time goes by, The closed paid accounts will impact your credit score less and less.

If you’re looking for other ways to improve your credit score please go to GetLoanReady.com you can get free videos and worksheets to increase your credit score from a more holistic perspective. Never Pay Collections

If you want to see more videos about credit and credit scoring check these out at www.thecreditguy.tv. If  you are a mortgage lender please share this on your Facebook or LinkedIn page.   If you have any questions, leave them down below I’d be happy to answer them.

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Closed account on credit report

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