Remove Charge-Offs

There are times when you miss payments on your credit cards or loans. It can happen to anyone. But when those missed payments pile up, it can lead to a "charge-off."

A charge-off can severely damage your credit, but the good news is that there are steps you can take to address it to improve your credit score.

This credit resource guide will explain what a charge-off is, how it impacts your credit, and the steps you can take to remove this negative entry from your credit report.

What is a Charge-Off and What Happens to the Debt?

So, what exactly is a charge-off? Consider that you borrow money from a bank or a credit card company, but for some reason, you stop making payments.

After several months of missed payments, the lender might determine they don't think they'll get their money back. When that happens, they "charge off" the debt.

This means the lender writes off the loan, for accounting purposes, as a “loss” for their company. It’s like they're saying, "Okay, we don't think we'll get this money back." They cancel your account and report the charge-off to credit bureaus.

Here’s how a charge-off works:

A charge-off usually happens after you’ve missed payments for a long time. It could take about 120 to 180 days of not paying before the lender marks the account as a charge-off and reports it to credit bureaus. However, this time frame can vary depending on the lender.
You can have a charge-off on different types of loans, like credit cards, car loans, and student loans.
Even though the debt is “charged off,” you still legally owe that money.
The lender might sell the debt to a collection agency, which will then try to recover the amount owed from you.

How Does a Charge-Off Affect Your Credit?

A charge-off is one of the most damaging entries on a credit report.

Here's why:

It signals unreliability:A charge-off tells future lenders that you failed to meet your financial obligations. It makes you seem like a risky borrower.
It lowers your credit score:A charge-off can lower your credit score quite a bit, which in turn can make securing future credit or loans harder and may lead to higher interest rates.
It adds a double hit: The missed payments leading up to the charge-off also hurt your score, and the damage compounds further if the debt goes to collection.

How Long Does a Charge-Off Stay on My Credit Report?

A charge-off can stay on your credit report for about seven years from the date of your first missed payment. This can make it hard to get credit for a long time as you’d be perceived as a high-risk borrower.

Paid vs. Unpaid Charge-offs

Charge-offs can appear on your credit reports as either paid or unpaid.

Paid Charge-offs:If you pay the debt in full, the status updates to "paid," on your credit report, which looks better to future lenders. They will see that you eventually paid what you owed. But, paying off a charge-off doesn’t remove it from your credit report—it stays for the full seven years.
Unpaid Charge-offs: These remain unresolved and indicate to lenders that you failed to address your obligations. Unpaid charge-offs can further hurt your credit profile.

Steps to Remove an Accurate Charge-off from Your Credit Report

Removing a negative credit report entry like a charge-off is challenging (if its accurate) but possible with persistence. Here are the steps to remove an accurate charge-off from your credit report:

1. Document All Relevant Information

Collect all information about the debt, including the creditor (or who owns the debt if it was sent to collections), amount owed, and the debt’s age.

2. Negotiate a Pay-for-Delete Agreement:

This is when you offer to pay the debt in exchange for the creditor or the collection agency removing the charge-off from your credit report. You can try this approach with both the original lender and a collection agency to have the negative entry removed from your credit report.

If the debt is with the original creditor, ask if they’re willing to remove the charge-off in exchange for full payment.
If the debt is with a collection agency, you can offer a settlement. The collection agency may accept a lower amount since they probably bought the debt for less than you owed. Some agencies may agree to delete the charge-off if you pay a portion of the debt. You can start with an offer of 25% of the original amount. It’s more likely that you’ll have to pay the full amount to the collection agency if it's a small balance like a few hundred dollars.

3. Get It in Writing:

A lender is not legally required to remove a charge-off from your account. So, make sure that any pay-for-delete agreement is documented on company letterhead.

It should information on how much you'll pay, confirmation of no further obligation, and the assurance that the charge-off will be removed.

How to Dispute Inaccurage Charge-offs?

Sometimes, a charge-off might contain incorrect information, which can work in your favor. Common errors include incorrect dates, amounts, account numbers, or even instances where the charge-off doesn’t belong to you at all.

Disputing such credit report errors can potentially lead to the removal of the charge-off from your credit report.

Check your credit report and find all the errors.
Write a dispute letter to each credit bureau (Equifax, Experian, and TransUnion) that is reporting the inaccurate information.
Explain the error clearly and include supporting documents.
Request to have the charge-off removed or corrected.

Credit bureaus are required by law to investigate disputes within 30–45 days. They will contact the creditor to verify the accuracy of the charge-off information. If the creditor cannot verify the details, the charge-off must be removed or corrected on your report.

Does a Charge-off Hurt Your Credit More Than a Collection?

Yes, a charge-off generally has a more severe impact on your credit score than a collection. Collections often provide more opportunities for negotiation, which may lead to the removal of the negative mark.

Can a Credit Repair Company Help?

Dealing with charge-offs can be tricky, and you might want some help.

Experts at credit repair companies, like AMERICA CREDIT CARE, know how to frame disputes and what information to include in a dispute letter to increase its chances of being approved.

Reputed credit repair companies can help you figure out the best steps to take, negotiate with lenders, and file disputes with the credit bureaus. They can also help with debt settlement, which involves agreeing to pay a portion of the debt. Yes, you can settle for less than the full amount owed.

Credit repair companies can help negotiate with lenders and file disputes.
They can help you with pay-for-delete agreements and debt settlement.
Be aware that debt relief companies may charge substantial fees.

Final Words

Charge-offs can be difficult, but not impossible to deal with. Whether you decide to negotiate, dispute inaccuracies, or seek professional assistance from an established credit repair company, remember that you have options for rebuilding your credit.

The sooner you take action, the better your chances of mitigating the impact of a charge-off on your credit history. Every step toward resolving charge-offs brings you closer to improving your credit score.

Contact team AMERICA CREDIT FARE for affordable credit repair services today if you need professional help to remove inaccurate charge-offs from your credit report.

We have many years of experience in evaluating credit and guiding consumers to assert their legal rights. We do it every day! We guarantee honesty and dependability, virtues which most people seem to have forgotten.

Company

Home

Client Login

Pricing

Partner Program

Support

Contact Us

I agree to terms and conditions provided by the company. I agree to receive notification messaging from AMERICA CREDIT CARE at the phone number provided above. I understand I will receive up to 10 messages a month, data rates may apply, reply STOP to opt out.