Decoding Your Credit Report: What Closed, Paid in Full, and Settled Mean

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Understanding Credit Report Terminology

Your credit report contains a wealth of information about your credit accounts. Terms like “closed” and “paid in full” indicate the status of these accounts. At O1ne Mortgage, we want to help you understand these terms and how they impact your credit. For any mortgage service needs, call us at 213-732-3074.

What Does “Closed” Mean on a Credit Report?

Each credit account on your report will show whether it is open or closed.

Revolving Accounts

A closed revolving account, such as a credit card, is an inactive card that you can no longer use for new purchases or transactions.

Installment Accounts

A closed installment loan, like a personal or auto loan, could mean the loan was paid off in full. Alternatively, if you fell behind on payments, the account might be closed and transferred to collections.

Additional comments may describe the closure circumstances. For example, a credit card report might indicate if the card was closed due to inactivity, by the creditor for another reason, or at your request.

What Does “Paid in Full” Mean on a Credit Report?

An account marked as “paid in full” is closed with a zero balance. The specific terminology can vary based on the credit report and account details.

For instance, if you paid off a loan or closed a credit card without missing payments, your report might state:

• Closed/never late
• Closed; was paid as agreed
• Paid and closed

If you missed payments but later paid off the account, you might see terms like “paid; past due 30 days” or “paid in full after collections.”

How Long Do Closed Accounts Remain on a Credit Report?

Closed accounts can stay on your credit report for up to 10 years, affecting your credit scores. The duration depends on whether the account was in good standing or past due when closed.

Accounts Closed in Good Standing

A closed credit card or loan in good standing will remain in your credit file for 10 years. If you missed a payment, the late payment will be removed after seven years, but the rest of the account can stay for up to 10 years if brought current before closure.

Accounts Closed When They’re Past Due

If an account was closed while past due, it will be removed from your credit report seven years after the original delinquency date, which is the first late payment in the series leading to closure.

What Does “Settled” Mean?

“Settled” means you reached an agreement with your creditor or a collections agency to pay less than the full amount owed. While you won’t owe additional money, creditors will see that you paid less than the full balance.

Settling or paying off collection accounts can be better for your credit scores than having an outstanding past-due balance. Newer credit scoring models ignore paid-in-full collection accounts. However, settling is still worse for your credit than repaying a loan or credit card on time and in full.

Check Your Credit Report for Free

You can review your credit reports to see all open and closed accounts. With a free Experian account, you can access your Experian credit report anytime, along with free credit report monitoring, FICO® Score updates, and real-time alerts about important changes.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your credit and mortgage options.

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