Your credit report contains a great deal of information about your credit accounts, and on some, creditors may add a comment about the status of your credit accounts. When reviewing your credit report, you may find that some closed accounts have a comment that says “account closed at grantor’s request”, “closed by grantor”, or “canceled by credit grantor” and you may wonder what that means.
Well, in this article we are going to explain what this comment means, what its impact is on your credit score, and what steps you need to take to remove it. But first let’s start by explaining some basic things about it.
- 1 What is a credit grantor?
- 2 Why does “account closed at grantor’s request/closed by grantor/canceled by credit grantor” appear on my credit report?
- 3 That credit account may have been closed for any number of reasons, including:
- 4 Does the comment have any effect on my credit score?
- 5 When should I remove a closed account from my credit report?
- 6 What can I do to remove a closed account from my credit report?
What is a credit grantor?
As a credit grantor, a credit card issuer can make many decisions about your account, as described in your credit card agreement. For example, it can increase or decrease your credit limit and your interest rate; charge you fees for certain transactions, or as a penalty if you are late on a payment. Likewise, the grantor of the credit can also close your credit card account, sometimes without prior notice.
Why does “account closed at grantor’s request/closed by grantor/canceled by credit grantor” appear on my credit report?
Now that you know who your credit grantor is, let’s explore why “account closed at grantor’s request/closed by grantor/canceled by credit grantor” might appear on your credit report.
Why might the issuer have closed the account?
That credit account may have been closed for any number of reasons, including:
- You were late with payments.
- The card was inactive for a certain period of time.
- The card was replaced by a new version.
- The creditor detected fraud on the account.
- You reported the card as lost or stolen.
In this order of ideas, the credit agencies are obliged to include in your report only information that is accurate and true. If, for example, your credit report shows that the credit card issuer closed the account, but you actually requested the closure, you can dispute the information. When doing so, include a copy of the closing request and the certified mail receipt that proves the creditor received your request.
Otherwise, if the comment is accurate, it will remain on your credit report for a period of time. And if the account was closed with negative information, then it will be removed from your credit report after seven years. In addition, closed accounts with positive information will remain on your report based on each credit bureau’s internal guidelines, which is typically ten years after the account is no longer active.
Does the comment have any effect on my credit score?
You may be concerned about how a comment that your credit grantor closed your account will affect your credit score. After all, your credit score is one of the most important numbers in your financial life, as having a good one is critical to getting your credit card and loan applications approved.
Fortunately, any comment that the credit grantor closed your account, or the fact that the creditor closed it instead of you, doesn’t hurt your score at all. Why? Well, because comments are not taken into account to calculate your score, and only account activity can affect it.
Is it really an important fact?
Now, a creditor to whom you have applied for credit will not know that an account was closed by the credit grantor unless they manually review your credit report. Creditors often focus only on credit scores because they can make their decision faster.
And even if a creditor decides to review your report, they may not take into account the fact that an account has been closed by the credit grantor, especially if the rest of your credit report contains positive information. There are so many people opening and closing credit cards these days that it’s no longer considered a negative if an issuer closes a card, as long as it was closed in good standing, of course.
However, there are certain situations where your credit score could be affected. For example, if the closed credit card still has a balance, if it was the only card you had, or if the closure was due to late payments.
When should I remove a closed account from my credit report?
There are different situations where it makes sense to delete a closed account, so weigh the potential implications on your credit score in the balance.
“For example, if the account has positive information, then removing it is probably not in your best interest,” says David Chami, managing partner of Price Law Group, a specialist debt relief agency.
a particular case
Josh Rubin, owner and CEO of Sacramento, California-based marketing firm Post Modern Marketing, found out firsthand how deleting a closed account can affect credit. In August 2018, he paid off the remaining $15,000 of his student loan debt in full. When he checked his credit in September, his score had dropped from the high range of 700 to 640.
After paying off the loan, your credit grantor not only closed the account, but also removed all payment history from your credit report. The creditor was within their rights, as they are not required by law to report information on the borrower’s account to credit bureaus. However, it was Rubin who paid the price.
“I thought it wouldn’t be a bad thing since I’m less in debt now and technically it should represent less of a financial risk,” he says. “However, the agencies see it a little differently; They see that I now have a shorter history and only a couple of lines of credit, so I’m a bigger risk to them.”
In Rubin’s case, he didn’t ask to have the closed loan account removed from his report, but his situation serves as an example of why this is something to approach with caution. Losing the positive payment history associated with that account greatly hurt your score. Rubin says he is now in the process of having the creditor restore his payment history in hopes that his credit rating will recover.
If you have a closed account with a positive history, it may be better to leave it alone than try to have it removed. On the other hand, it is also possible that deleting a closed account will increase your score. In this case, you have several options.
Keep reading: Should I buy a car with a credit card?
What can I do to remove a closed account from my credit report?
There are some steps you can take to remove closed accounts of your credit report. If one doesn’t work, try the next one.
- Dispute inaccuracies.
- Write a letter of good will.
Step 1: Dispute the inaccuracies
All three credit bureaus – Equifax, Experian and TransUnion – allow consumers to initiate disputes online or by certified mail. When a dispute is started, certain information needs to be provided to the credit bureau, including:
- Your name
- Account number
- The nature of the information you are disputing
- Supporting documentation to show why the dispute is valid
From there, the credit bureau must investigate your claim with the creditor or lender in question, usually within 30 days, and notify you in writing of its findings. If disputed information is inaccurate, by law it must be removed or corrected. Once an error is removed from your report, the credit bureau cannot add it back unless the lender or creditor proves it was accurate..
That process can deal with negative information related to an error, but it can’t completely remove a closed account. And if you’re seeking removal based solely on negative activity, it’s probably a dead end if the information is correct. However, there are other paths you can take to get a closed account removed.
Step 2: Write a goodwill letter
A goodwill letter is essentially a polite way of asking a creditor or lender to remove the history of a closed account from your credit report. This is not the same as a dispute, since negative information is presumably requested to be removed without questioning its accuracy. And the creditor has no legal obligation to do so.
Writing a goodwill letter can be more effective when there are extenuating circumstances, such as if you missed a credit card or loan payment due to a serious illness or injury that put you out of work for an extended period of time. In addition to considering forces beyond your control, creditors may also weigh your past payment history and whether you’ve made any good-faith attempts to pay regularly.
Step 3: wait
If the negative information you want removed is accurate and the creditor is not interested in removing it, you may not have any other options. But closed accounts don’t last forever.
Depending on how patient you can be, you might be able to wait for a closed account to disappear from your credit report on its own. In the case of negative information, it is important to understand the timing.
Any negative information in the payment history will be erased seven years after the original delinquency date of the debt.
Essentially, the clock starts ticking on negative items when they are first reported on your credit, not when the account was closed. Depending on how old the account is, it may be close to being removed from your report anyway, in which case you just have to bide your time. To get an idea of when this might happen, we recommend that you review your credit report.
You can get your report from each of the three credit bureaus for free once a year through AnnualCreditReport.com. Signing up for a free credit monitoring service can help you better track your accounts and credit score.