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Can a Closed Account on My Credit Report be Reopened?



Question: I have an auto loan with Ally about 3 years remaining. The loan is current and never late. I have great credit, FICO 777. All of a sudden the loan is showing ‘closed’ on all three reports. This dropped my scores some due to ratios but I know it will recover over a few months.
But my question is should I fight to get the loan shown back on my reports? It shows I paid off $16,000, but my fear is if they re-report the loan, then the algorithm will see it as a new loan and ding my credit even further. I will continue to make my payments on time. I just don’t want to do anything that will hurt my scores further. Advice?
– Hershel in Arkansas

Ashley Davison of Credit Saint responds…

Hi, Hershel, and thanks for your question.
You’re right that your score should recover in a few months. As long as you’re not planning on applying for any new loans or credit cards during that time, it would not be too much of a problem. However, it’s always a good idea to make sure the information in your credit report is as accurate as possible.

Contact the data furnisher first in this case

When you see a mistake in your credit report like this, you have two options for who you can contact – the credit bureau that issued the report or the data furnisher. Data furnisher is just a fancy way of saying the creditor or lender who provided the information.

In this case, I would contact Ally Financial first and question why they are reporting the account closed. This may be a simple reporting inaccuracy. I would contact them and request it be reported correctly.

If they acknowledge that the information needs to be corrected, then they will contact all the credit bureaus that they report information to. This saves you the trouble of having to contact each bureau individually about the information you are disputing.

Will a reopened account affect a consumer’s credit score?

And yes, the reason that you saw a slight drop in your score is most likely because the closed account decreased your “credit age,” which measures the average age of all your active accounts. However, you don’t need to worry that reopening the account would drop your score even further, and here’s why…

The credit score algorithm is calculated from the “date opened” date. So even if an account was opened 10 years ago and is only just starting to report now, it should not be considered a new account.

The most important thing you mentioned in your question was that you will continue to pay on-time. This is very important. If and when they do update the account to reflect correctly, you want to have those months of positive history and not risk any new damage.

The bottom line

You have the option to dispute this with the credit bureaus but I would save some time and try to go to the creditor first. If they reopen the account, it should not negatively affect your score. The account open date should reflect that it was opened 10 years ago.

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