When a credit account is paid in full and closed, it marks the successful completion of a borrower’s obligation. Accurate reporting of such accounts is not only a reflection of a consumer’s financial responsibility but is also critical for Fair Credit Reporting Act (FCRA) compliance. Furnishing this information properly ensures that the consumer receives the benefit of a positive payment history while preserving the integrity of the credit reporting system.
Why Proper Reporting Matters
Paid, closed accounts may still impact:
- Credit Score: A positive account with a solid payment history can help improve a borrower’s credit profile even after it’s closed.
- Credit Age: Length of credit history is a factor in scoring models, so properly maintained closed accounts help reflect a longer, healthier history.
- Lender Decisions: Lenders view these accounts as indicators of creditworthiness and repayment reliability.
Steps for Reporting Paid, Closed Accounts
1. Set the Account Status Correctly
The account should be reported using one of the following Account Status Codes:
- 13 – Paid or closed account/zero balance
- 61 – Account paid in full, was a voluntary surrender
- 62 – Account paid in full, was a repossession
- 63 – Account paid in full, was a charge-off
- 64 – Account paid in full, was a foreclosure
- 65 – Account paid in full, was a deed-in-lieu of foreclosure
Each code provides specific context, and choosing the correct one is essential.
2. Set the Balance to Zero
The Balance Amount and Scheduled Monthly Payment Amount should both be set to zero. This reflects that there is no remaining financial obligation from the consumer.
3. Do Not Delete the Account
FCRA does not require the deletion of closed accounts. In fact, paid accounts in good standing may remain on a credit report for up to 10 years from the date closed.
4. Maintain Full Payment History
The full payment history—on-time or delinquent—must remain with the account. It’s illegal and misleading to remove negative information before the FCRA’s expiration period.
5. Ensure Accurate Dates Are Retained
- Date Opened
- Date Closed
- Date of Last Payment
- Date of First Delinquency (if applicable)
These fields help CRAs and lenders determine how long the account has been in the credit file and if any derogatory data needs to age off.
Compliance with the FCRA
Furnishers must ensure that reported information is:
- Accurate – Reflects the correct status, balance, and historical data.
- Complete – Includes full payment history and all relevant date fields.
- Timely – Report updates within the appropriate monthly reporting window.
Impact on the Consumer
✅ Positive Credit History
These accounts often improve the consumer’s score and help offset negative accounts.
✅ Improved Lender Trust
They demonstrate reliability in managing and fulfilling financial obligations.
✅ Long-Term Benefit
They support the consumer’s credit length, a key metric in most credit scoring models.
Conclusion
Paid, closed accounts are important building blocks of a strong credit history. Reporting them accurately, with correct status codes and a zero balance, ensures that consumers receive the credit they’ve earned—and keeps data furnishers compliant with federal law.