How Long Do Settled Accounts Stay On A Credit Report

Generally, a settled account will remain on a credit report for seven years from the date of settlement with the lender. Even if you have resolved the debt years ago, it will remain on your credit report until the seven-year period is covered. 

A credit report the history of how an individual has managed their various debts/credits. Any activity like paying off or closing an ongoing debt, the lender will update the report to reflect the account’s new payment status. Anyways, paying off or closing an account does not cause it to be removed immediately from the report. 

To understand this better, let’s first check out: 

What is a settled account?

An settled account generally means that the lender has accepted an amount less than the full balance owed as payment. This potentially indicates negative because the settled amount is less than the actual amount to be paid to the lender. Since something is better than nothing, most lenders prefer a settled account than an account that is still past due with an outstanding balance. In some scenarios, such as when you apply for a mortgage, the lender will ask you to either pay off or settle any outstanding debts before you qualify for a loan.

Settled Accounts Remain on Credit Reports for Seven Years

If at all 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 negligent. That date is called the original delinquency date.

Although settling an account is viewed as negative, it’s marginally better than not paying at all. If you have any past-due debt and paying it 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 which are called delinquencies then the account will remain on the credit report for seven years from the date it was reported settled.

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