When Are Accounts Updated to Show as Paid in Full?

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Dear Experian,

I traded in a car, and the dealership paid the remainder of the account balance. When will the account show on my credit report as paid in full?


Dear VMS,

When you trade in your car for a new vehicle, the dealership sends a check to the lender to pay off the balance on your old account. This process goes smoothly in most cases, but it's always a good idea to contact your previous lender to make sure that they received the payoff in a timely manner.

Even though you no longer possess the car, your credit may be affected if the payment is not received by your next scheduled due date.

How to Update an Account to Show Paid

How quickly the payoff is reported to Experian once payment is received depends on the lender's reporting schedule. A good rule of thumb is to allow 30 to 60 days for the information to be updated.

If it's been more than a couple of months with no update, or if having the account updated is a time-sensitive matter, you can dispute the account directly with Experian. Experian will contact the lender on your behalf and ask them to verify and update the information. If you have documentation from the lender showing that the account has been paid off, you can submit a copy of that documentation along with your dispute request.

How Long Will a Paid-Off Loan Appear on the Report?

When you pay off a loan, the account will be updated to show that it has been paid in full. Your credit report will retain the account's payment history, however. If there were late payments on the account, they'll remain on your credit report for seven years, at which time they will be automatically removed. If the account was delinquent at the time it was paid, it will be deleted from the report seven years from the original delinquency date. Accounts with no late payments may remain on the report for up to 10 years from the date they were paid off and closed. Find out the difference between closed, and paid in full credit accounts. Keeping accounts in good standing on your credit history longer helps you rebuild your credit faster if you've had problems in the past.

How Will Paying Off an Account Impact My Scores?

While it's always good to pay off debt you owe, paying off an installment account, such a home or car loan, may result in an initial dip in credit scores. (Accounts closed in good standing aren't factored into credit scores as heavily as open and active accounts.) The good news is that any decline is usually temporary and scores should bounce back up within a month or two.

You can order your FICO® Score for free from Experian online. When you get your score, you will also receive a list of the risk factors that are currently impacting your scores the most. If you are trying to improve your credit scores, focus on addressing these specific risk factors.

Experian also offers a free service called Experian Boost®ø that can help you increase your credit scores instantly by including your on-time utility and cellphone payments in your credit report.

Thanks for asking.

Jennifer White, Consumer Education Specialist