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Topics addressed on May 3, 2006:
The difference between “closed” and “paid in full”
Some of my accounts that are paid in full show “closed” instead of “paid in full.” Does this hurt my credit rating? If my account is paid in full but did have delinquent payments throughout the term of the loan, can it be deleted seven years from the original delinquency date?
“Closed” and “paid in full” mean essentially the same thing, but the terms usually apply to different kinds of credit agreements.
Revolving accounts, like credit cards, are referred to as “closed” when the account can no longer be used to make charges. Typically, you notify the lender to close the account when it has a zero balance and you no longer want the credit card.
“Paid,” or “paid in full,” is the term applied to installment accounts, like car loans, when after the last payment is made and you have completed repayment of the loan as agreed.
In both cases, the terms indicate a “final status,” meaning the account is no longer active and cannot be used again.
Occasionally the terms are interchanged on accounts, but the underlying meaning is the same.
Accounts that are “paid” or “closed” but that have delinquent payments in their history will be deleted seven years from the original delinquency date.
“Paid” or “closed” accounts that do not have delinquent payments or other negative information in their history will remain 10 years from the time they are closed. That ensures the positive information will remain longer than negative information, helping you build a long and stable credit history.
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- The "Ask Experian" team