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In this Article: A complete guide on how to remove a charge off from your credit report and protect your credit score from dropping.
Negative information of any kind hurts your credit score, but charge offs are about as bad as it gets.
If you had an account charged off, it is crucial to know how to take care of it right away before it does more damage to your credit score and future loan options.
With one in five consumers having an error appear on their credit report, you must take the necessary steps to remove a charge off from your credit report.
What is a Charge Off?
A charge off is a big deal. It tells future creditors that your current (or past) creditors gave up on recouping the money you borrowed.
The creditor may have sent the account to collections, sold it to a debt collector, or they may have just written it off. Either way, it’s not good for your credit score.
Charge offs occur between 120 and 180 days of non-payment. Creditors typically don’t notify you that they charged off the account.
Consumers find out when they pull their credit report, try to get new credit, or when a collection agency contacts them.
Do You Still Owe Money on a Charge Off?
Your creditor may have given up on getting the money back from you, but that doesn’t mean you don’t owe it.
The debt will report on your credit report as a charge off and outstanding balance, neither of which helps your credit score. If they sold your account to a collection agency, it would show up on your credit report as such.
The first thing you should do is get a copy of your credit report and verify it is actually showing up as a charge off.
But if the creditor did not sell it (most do), it will still show up as outstanding, and the creditor can bring judgment against you to get the money back.
How Can I Remove a Charge Off from My Credit Report?
There’s no guarantee that you can remove a charge off from your credit report, but there are options. From our industry-leading experience, the best way to remove a charge off from your credit report is by hiring a credit repair company, filing a dispute, or negotiating a settlement.
If one method doesn’t work, try another until you exhaust your options and then just wait it out.
How to Remove a Charge off from Your Credit Report (4 Proven Ways)
1. Hire a Credit Repair Company
Disputing charge offs can feel overwhelming. If you are unsure what to dispute, how to handle it, or just don’t want to do it yourself, hire a credit repair company.
While they can’t remove the charge off for you, they can dispute anything and everything about the account that they find wrong.
Reputable credit repair companies know just what to look for and dispute based on the Fair Credit Reporting Act (FCRA).
Most credit repair companies, like Credit Saint, look for unfair, untimely, or inaccurate information. Since this is their specialty, they know even the smallest things to look for that could knock the charge off from your credit report.
>> More:Credit Saint Review
2. Dispute the Charge Off
If you want to save some cash, you can dispute the charge off yourself. Here’s how.
Pull your credit report and go over the account with a fine-toothed comb. Look at things like account numbers, dates, payment amounts, and balance information. Even look at the spelling of your name. You’re looking for any possible errors.
Write an official dispute letter (online or via snail mail) to each of the bureaus reporting the information stating the error.
Provide proof of why the information is inaccurate too. The credit bureaus have 30 days to respond. If they can’t verify the information, they must remove the charge off for your credit report.
3. Negotiate a Pay for Delete Settlement
If you have the money to pay for the charge off (at least a fraction of it), consider negotiating a pay for delete.
As the name suggests, you agree to pay the amount due (or an agreed-upon amount), and in exchange, the creditor will remove the charge off.
They are under no legal obligation to agree, so if you negotiate this, make sure you get it in writing. Before you call, know how much you can pay.
If it’s an older charge off, start at 50% or less of the balance. They will negotiate higher, so start low to end up where you want to be.
Be professional during your negotiations, do not place blame, and don’t accept responsibility. Just state the facts until you agree. Don’t let the creditor tell you they can’t remove the charge off from your report either – they can.
You may also send your request in writing. Send a formal ‘pay for delete’ letter and wait for a response in writing before doing anything. Never give a collection agency your bank account information either.
4. Wait for it to Fall Off
After 7 years, the charge off falls off your credit report. It affects your credit score the most in the first 2 years, but some lenders won’t give you new credit until you satisfy it.
If you can’t pay the debt, 7 years may feel like forever, but then it’s behind you and won’t hurt your chances of getting new credit moving forward.
How Does a Charge Off Affect Your Credit Score?
A charge off can be devastating to your credit score. You can lose as much as 100 points, depending on your credit score before the charge off.
Higher credit scores have the most to lose and typically get hit by at least 100 points for one charge off.
Paid vs Unpaid Charge Offs: What is the Difference?
Your credit report may show one of two types of charge offs – paid or unpaid. The name says it all, but understanding how lenders look at them is important.
What is a Paid Charge Off?
If you pay a charge off in full, it reports as ‘paid’, but the charge off status remains on your credit report. Lenders look at this more favorably because it shows that you made good on your debt.
What is an Unpaid Charge Off?
Charge offs you didn’t pay are unpaid and have a more devastating effect. Most lenders require you to pay charge offs before giving you new credit. An unpaid charge off is a negative item on your credit report that needs to be removed immediately.
Will My Credit Score Improve if I pay the Charge Off?
Your credit score won’t immediately improve if you pay the charge off, even if you pay it in full. In fact, the effects of a paid charge off are minimal because it remains on your credit report. Lenders view it more favorably, though, which is essential.
However, after you pay it off, the most important thing you can do is remove the charge off from your credit report. Again, try one of the three strategies we discussed in detail above.
How Long Do Charge Offs Stay on Your Credit Report?
Charge offs (paid and unpaid) stay on your credit report for up to 7 years. The only way to have them removed sooner is if you hire a credit repair company, agree to a pay for delete, or you dispute the information with the credit bureaus.
While this may seem overwhelming and intimidating, removing the charge off is the best thing you can do to protect your credit score and personal finances.
Can a Charge Off be Reported Monthly?
Unfortunately, yes! If the creditor doesn’t sell your account to a collection agency, they may update the balance monthly. If they sell it off, though, it should report as a $0 charged-off balance with the original creditor.
Can a Charge Off be Reopened?
Once a creditor charges off your account, they cannot reopen it. The only thing they can do is sell it to a collection agency, which then serves as a ‘new’ debt on your credit report.
4 Tips for Removing Charge Offs from Your Credit Report
Whether you pay the charge off or dispute it, use the tips below for the best results.
1. Do Not Make Cash Payment
If you make payments, make them by check only. This gives you a proof of payment should the collection agency or original creditor not report the payments appropriately. Keep a copy of the checks for at least 7 years in case there is a dispute.
2. Handle all Correspondence through Certified Mail
Any communication you have with the creditor should be in writing. If you have a verbal conversation, follow up in writing. Send all correspondence via certified mail, so you have proof of receipt.
3. Stay Away from “Direct Withdrawals”
Don’t let a creditor talk you into giving your checking account information for direct withdrawal. Only make payments via check that you send yourself.
4. Report to the Credit Bureaus Directly
Once you pay the charge off in full, report the payment to the credit bureaus yourself. Do not rely on the creditor or collection agency to do it for you – they don’t benefit from it.
Send a copy of the check(s) paying the debt in full along with a letter stating that you paid the debt as agreed with the creditor. Don’t forget to ask the credit bureau to delete the charge off from your credit report.
>> More: How to Fix Your Credit Score
Can a Credit Repair Company Remove a Charge Off?
Technically, a credit repair company can’t remove a charge off, but there are loopholes, and that’s how they help.
If the credit repair company finds anything wrong with the information reported, they’ll dispute it on your behalf and get it removed.
However, they are incredibly skilled at their job. They will do everything to help you improve your credit score, protect your rights, and move on from this unfortunate situation.
Bottom Line: How to Remove aCharge Off from Your Credit Report
The best way to remove a charge off from your credit report is never to have one in the first place. But, as we know, life happens, and sometimes we cannot take care of our obligations.
If this happens, handle the situation right away. Try getting it removed by disputing it either yourself or with a credit repair company.
If that doesn’t work, try a pay for delete letter and do your best to pay the debt off and get the information removed from your credit report.
Additional Items to Remove from Credit Report:
- How to Remove a Late Payment from Your Credit Report
- How to Remove Repossessions from Credit Report
- How to Remove a Negative Item from Credit Report
- How to Remove a Collection Account from Credit Report
- How to Remove a Judgement from Credit Report
- How to Remove Hard Inquiries from Credit Report
- How to Remove Student Loans from Credit Report
