How To Remove A Charge-Off From Your Credit Report

A charge-off is what happens when you fail to make your credit card payment for several months – usually six months in a row. After several months of non-payment, the creditor writes off the debt as a loss (in their own accounting books), cancels your account, and demands that you pay the past due balance in full. This is very bad for your credit score and remains on your credit report for seven years plus the 180 days before your account for charged off.

Remove A Charge-Off

Charge-off Debt Is Still Yours

You’re still responsible for paying a charge-off. As long as the charge-off remains unpaid, the creditor can continue attempts to collect on the account and that may include suing you for what you owe. This will also affect your approval for new credit card and loans, so it’s in your best interest to remove charge-offs from your credit report. Negotiation is your best tactic for reducing the effects of a charged-off account.

Talk to the Creditor | How To Remove A Charge-Off From Your Credit Report

Often, charge-offs are passed on to a third-party debt collector soon after the charge-off date. Before it gets to that, you need to talk to your credit issuer. It’s better to deal with the original creditor (who reports the charged-off status) than a debt collector. A collector can’t do anything about what the original creditor reports to the credit bureaus.

You want to convince the creditor to remove the charge-off from your credit report in exchange for payment. Before you make the call, know how much you’re able to pay on the account. The more you can pay and the sooner you can pay it, the more negotiating power you have. If you can pay in full, you’re in a better position to negotiate. Ask to speak to someone who has the authority to remove the charge-off from your credit report.

Speak politely and professionally. Best case, the creditor will agree to remove the charge-off from your credit report.

Send a pay for delete letter | How To Remove A Charge-Off From Your Credit Report

You can also negotiate a charge-off removal by sending a pay for delete letter. The letter essentially asks the creditor to remove the account from your credit report in exchange for full payment. The key to a successful pay for delete letter is getting it in the right hands. Try to get the name and direct address of the person in charge, rather than sending your letter to a general correspondence address.

Credit card companies are contractually bound to report credit information to the credit bureaus, so it can be difficult to get a creditor to agree to remove the charge-off from your credit report. Even so, some cardholders have been successful in making pay for delete agreement.

If you can’t get the creditor to agree to remove the charge-off completely, try for something less negative like a simple “Closed” rather than “Charged-Off.”

Get the Agreement in Writing

When the creditor agrees to remove the charge-off from your credit report, get the agreement in writing.

You can do this in one of two ways:

  1. Have the person you spoke with fax you a copy of the agreement on company letterhead.
  2. Alternatively, get the name, mailing address, and phone number of the person you spoke with. Send a copy of your agreement to that person via certified mail with the return receipt requested. Request the person sign and return a copy to you.

Avoid making payment until you have the agreement in writing and can prove that someone from the creditor’s office made the agreement. Once you have fulfilled your part of the agreement, check your credit report to make sure the creditor has removed the charge-off.

When You Can’t Get Your Way – Last Option

If your negotiation fails and you can’t get the creditor to budge, decide if you want to pay the account or not. Even though the account will continue to be reported as charged-off until the credit reporting time limit is up, it will affect your credit score less as time passes. However, some lenders will not grant you new credit or loans until you’ve taken care of all past-due accounts. So, if you plan to get a mortgage or auto loan in the next seven years, it’s better to pay the account. Once it’s paid, make sure your credit report reflects the payment.

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