A charge off on a credit report can be one of the most detrimental things to your score. A charge off indicates that you haven’t paid your account for 180 days. So, as you might imagine, your credit is already in pretty rough shape. A charge off means that the creditor is going to count it as a loss — but it doesn’t mean that the issuer can’t keep trying to collect. In fact, in many cases a charge off is turned over to a debt collection agency. You are still responsible for paying, since it is by no means debt forgiveness.
Removing a Charge Off from Your Credit Report
Once a charge off appears on your credit report, it can remain there for seven to 10 years. It’s a serious matter — and one that can go on hurting your credit score for as long as a decade. If you want to clean up your history, you can ask to have the charge off removed. But it will take some work. Here are the steps to follow as you attempt to have a charge off removed from your credit report:
- Approach the original creditor: It’s important that you avoid approaching the collection agency; it can’t do anything. Talk to the original creditor about removing the notation in your report.
- Offer payment: The creditor isn’t going to remove the item unless you have something to offer. Know how much you can pay, and when. The more you can pay, the better. You can also negotiate a payment plan.
- Settle on something: Even if the creditor won’t remove the charge off from the account entirely, you can still negotiate to have the account listed as “closed.” Even though “closed” isn’t as desirable as “paid as agreed,” or outright removal, it’s still better than a charge off listing.
- Make sure you have it in writing: Once you come to an agreement, you need to get it in writing. Make sure that you know who you spoke with, and record the information from the conversation.
- Send correspondence via registered mail: When you send payment, or when you send any sort of correspondence, make sure to use registered mail. Someone will have to sign for it, and you will get a receipt proving that it was received. Keep copies of all correspondence for your own records; make sure you don’t send the originals to the creditor.
The removal of a charge off on your credit report can really help you improve your credit score. Even having the change to “closed” can provide an upgrade in your credit. And, of course, as time passes and you make better money decisions, you will find that the charge off becomes less important.
However, you can still be limited in your loan options, and you might have to pay an interest rate premium as long as the charge off, and its after-effects, remains on your credit report. As a result, it is vital that you do what you can to pay off the account.