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Closed account - $0 balance

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Closed account - $0 balance

Hi! I was looking at my reports through Credit Karma as I'm trying to fill up my file a bit and boost my score. I have done decently so far, but I'm at a stand still right now. According to CK, I have about 26-27 closed accounts, all student loans. Most of them are the defaulted loans that I fixed through the rehab program (and are not reported yet, which I thought they were). Some of them however, are closed with a $0 balance and some have "transfer" as a remark. Should I do anything to try and get them removed or just let them go?  According to AES, the loans should be reported as removed from default on 02/28/19, but it can take longer than that for the bureaus themselves to remove them from my reports. 

 

I'm trying to reduce the negative accounts and dings on my report so I can try and get a personal loan. I also need to add 1-2 more CCs to my file to round it out ( I have a capital one quicksilver with $500 SL and Discover IT with $2k SL - not received in the mail yet).

Starting Score: about 500
Current Score: 629
Goal Score: 720


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Legendary Contributor

Re: Closed account - $0 balance

A closed account that is reporting a $0 balance can mean either that the debt has been discharged, or that the debt has been acquired by another party who now is the current creditor/owner.

 

For installlment loans, in almost all cases, the loan is not closed until it has been paid.

An exception is a federal student loan, wherein either rehab or consolidation can result in the loan being transferred to or picked up by a new creditor.  The original loan is thus closed, but there is a remaining debt that is then reportable by the new owner.

 

Revolving lines of credit permit a creditor to close an account while the debt remains unpaid.

That is for the purpose of preventing additional charges on the account, and thus increasing risk to the creditor.

 

Additionally, if the original creditor sells the debt, they are required to report a $0 balance to the CRA.

That does not signify that the debt is paid, it only signifies that no debt is now owed to the reporting creditor.

The acquiring party can then report their collection on the debt, with the current balance.

Update to show $0 is not per se basis for removal of the account by the creditor.

 

If you  have a revolving account that remains unpaid and has been updated by the creditor to show $0, the new owner can report at any time.

That is uusually a prudent time to pay the debt by offering the new owner a pay for not reporting offer.

Message 2 of 3
Established Member

Re: Closed account - $0 balance

Ugh, I just saw this now - it didn't notify me you replied! Thanks for your reply. The only balances I have are on the installment loans (student loans) and I think they may be starting to fall off. With them, instead of just one loan, they have 293 different ones so it's hard to keep track. My credit card balances are under 30% now, and that's only on one card in which I'm an authorized user. Now that my student loans are starting to sort themselves out, I'm considering applying for amex bce to round out my CC list. I applied for the personal loan and was denied. My score was above their minimum limit, but said that I don't have enough payment history between my car loan (13 months reporting, all on-time) and 1 CC reporting at the time. I guess they didn't look at my AU card and my new card didn't report yet. However, after they ran the HP to check for the loan, my score jumped from 635 to 685 (experian). I'm not sure if I want to apply for a loan through a different bank that is more lenient with thinner profiles, or wait a month and see if my discover card starts to report by then. I was hoping to have the loan secure by April. 

Starting Score: about 500
Current Score: 629
Goal Score: 720


Take the myFICO Fitness Challenge
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