Charge-Offs: What They Are and How to Get Them off Your Credit Report
One of the worst things you can have on your credit report is a charge-off. What is a charge-off, you might ask? A charge-off happens when an account has been behind on their credit card, mortgage, or other debt payments – usually after 180 days of not paying the required minimum payment. The creditor designating your debt as charged-off doesn’t mean you will not be required to pay the debt. Quite the contrary as the charge-off will stay on our credit report for seven years from the date it was reported as a charge-off. This would no doubt cause substantial harm to your credit score, affect future credit and loan applications — no one wants that. In this article, we will discuss charge-offs in detail as well as the steps to take to get them off your credit report.
What to expect when you get a charge-off
After your account has become delinquent due to missed payments, the creditor may decide that you probably won’t be able to pay back the debt, so they charge-off the debt account. The charge-off interprets as an offensive mark that stays on your report for up to 7 years from the date of the charge-off. If your account was sold to a third-party collector, it may appear as an account in collections on your credit reports – which may cause your credit scores to lower even more. Thus, making it very difficult for you to get credit at good interest rates. However, if you are responsible with your credit, the charge-off will begin to diminish faster.
How to remove charge-offs from your credit report
The first thing to do if you have a charge-off account on your credit report is to verify whether the information on the charge-off is correct. Ensure that only the recent collections account is open, and the rest are closed with a zero balance. Verify the outstanding balance as well as the charge-off date to make sure they are correct. If you find any error concerning the charge-off, you can file a dispute. However, if there are no errors and all the information is correct, you have to take steps to remove the charge-off from your credit report. Highlighted below are some of the steps you can take to achieve this:
- Negotiate with your creditor
Even though charge-offs are often passed on to third-party debt collectors, it is better to negotiate with the original creditor that reported the charged-off status. The creditor has the power to change some things, unlike the debt collectors that can’t do anything once the debt has been reported. You can negotiate with the creditor to remove the charge-off from your credit report in exchange for payment. However, you need to be aware of the total amount you are to pay on the account to increase your negotiating power. The earlier you can pay, the better the position you have.
- Written agreements
A written agreement is necessary once the creditor agrees to remove the charge-off from your credit report in exchange for payment. Do not make any payment until you have the written agreement direct from the creditors’ office.
Dealing with creditors is rarely a pleasant experience, and sometimes a lot of money is at stake. If you are being harassed by collectors or you need help navigating debt to get back on track, contact Dsouza and Strachan Law Group. For over a decade, the attorneys at Dsouza and Strachan have been helping the people of South Florida heal their finances.