How Long Do Settled Accounts Stay on a Credit Report?

young couple sitting on the floor going over finances
Dear Experian,

I settled and closed a delinquent account almost five years ago, and the creditor is still reporting. How can they do that if the account is closed?


Dear LSM,

A settled account remains on your credit report for seven years from its original delinquency date. If you settled the debt five years ago, there's almost certainly some time remaining before the seven-year period is reached.

Your credit report represents the history of how you've managed your accounts. When you pay off or close an account, the lender updates your report to reflect the account's new payment status. However, closing or paying off an account does not cause it to be removed immediately from your report.

What Is a Settled Account?

When an account is settled, it means the lender has agreed to accept less than the full balance owed as payment. Settling an account for less than the full balance owed is considered potentially negative because you did not repay the entire debt as agreed under the original contract.

Still, most lenders will view a settled account more favorably than an account that is still past due with an outstanding balance. In some cases, such as when you apply for a mortgage, the lender will require you to either pay off or settle any outstanding debts before you can qualify for the loan.

The Difference Between Debt Settlement and Credit Counseling

Some people confuse debt settlement with credit counseling. A credit counseling service is one that helps you organize your finances, teaches you how to manage debts going forward and may work with creditors on your behalf to assist with debt payment. A reputable credit counselor will not advise you to miss payments in order to negotiate a settlement when you have the financial means to make payments as agreed.

Debt settlement companies, on the other hand, typically negotiate a reduced balance with your lenders, usually resulting in the accounts being reported as settled for less than originally agreed. For that service they also charge a fee, which is often substantial. Accounts reported as settled are scored negatively by all scoring models. Many debt settlement companies also advise you to become delinquent on your accounts so they can negotiate a settlement. But doing so wrecks your credit history, leaving you worse off than when you started.

Settled Accounts Remain on Credit Reports for Seven Years

If there is a history of late payments, the account will be updated to show that it is settled and will remain in your credit report for seven years from the date the account first became delinquent and was never again current. That date is called the original delinquency date.

Although settling an account is considered negative, it won't hurt you as much as not paying at all. If you have a past-due debt and paying the debt in full is not an option, settling the account is typically more beneficial than leaving the balance outstanding.

If the settled debt has no history of late payments—called delinquencies—the account will remain on the credit report for seven years from the date it was reported settled.

If you are considering settling an account that is in good standing, talk to your lender first to see if there are other options that will allow you to continue repaying the debt without damaging your credit history.

How to Improve Your Credit After Settling Debt

Although the settled account will remain on your credit report for seven years, you can begin rebuilding your credit right away. Your most recent payment history is what lenders look at the most, so the more recently the settlement occurred, the more impact it will have, and vice versa. Here are some tips for improving your credit after settling a debt:

  • Make all your payments on time, every time. Your payment history is always the biggest indicator of future risk to lenders. Even one missed payment can hurt you substantially, so take care to ensure all payments are made on time.
  • Pay off any past due debts. If you have accounts in collections, charge-offs or delinquent accounts on your report, you should pay them off or bring them current as quickly as possible.
  • Keep your credit utilization low. How much of your available revolving credit you're using is another very important factor in your scores. Keep your credit card balances low and pay off your balance in full each month, if possible.
  • Sign up for Experian Boost®ø. With Experian Boost, you can get credit for your on-time utilities, cellphone and streaming service payments.
  • Order your free credit score. When you get your credit score from Experian, you will get a list of the top risk factors affecting your credit score. Improving those factors will help you improve your scores.

Thanks for asking.
Daniel Sayre, Director, Experian Consumer Product and Data Integrity Services