How to Remove a Charge off from your Credit Report[yoast-breadcrumb]
How to Remove a Charge Off from Your Credit Report
Having a charge off on your credit report can be damaging to your credit score. A charge off happens when you fail to pay a debt for an extended period of time and the lender writes it off as a loss, which often comes after 180 days of nonpayment. This negative item can stay on your report for up to 7 years.
The good news is that you may be able to remove a charge off from your credit report under certain circumstances. Here’s what you need to know about getting a charge off deleted from your credit history.
Verify the Charge Off is Accurate
Before trying to remove a charge off, first make sure that it is legitimate and reporting accurately on your credit report. You can obtain free copies of your reports annually from each of the three major credit bureaus – Equifax, Experian, and TransUnion – at AnnualCreditReport.com. Carefully review your reports and dispute any errors.
If the charge off contains incorrect information, such as the wrong date, amount owed or creditor name, you can dispute it with the credit bureaus. Provide copies of any evidence showing the inaccuracy and request an investigation. The credit bureau must complete the investigation within 30 days.
If you can prove the charge off is false or inaccurate, the credit bureaus are required by law to remove or correct it under the Fair Credit Reporting Act (FCRA). This should help lift your credit score since you no longer have that negative mark.
Negotiate Pay for Delete
If the charge off is reporting accurately, another option may be to contact the creditor or debt collector directly and request they remove it from your credit report in exchange for paying off the amount owed. This is known as a pay for delete agreement.
The creditor or collector is not required by law to accept this offer, but many may be willing to as a goodwill gesture to help consumersrebuild their credit. Make sure to get any pay for delete agreement in writing before providing payment.
If you can negotiate pay for delete, repaying your outstanding debt results in the win-win of becoming debt free and also having the charge off eliminated from your credit history. Just be aware that the creditor may only agree to mark the account as “paid” rather than deleting it altogether.
Invoke Goodwill Campaign
If the creditor won’t agree to pay for delete, another option is a goodwill campaign. This involves writing a letter to the creditor explaining your situation and respectfully requesting they remove the charge off as a goodwill gesture.
Point out any extenuating circumstances that led to the late payments, and emphasize how the negative mark is impacting your credit health. Also include that you’ve taken responsibility for the debt and demonstrate that you’re now in a stable financial position.
While not all creditors will accommodate a goodwill removal, it doesn’t hurt to try. Be persuasive, yet polite and understanding in your letter. Having already paid the debt also helps demonstrate you’re acting in good faith.
Wait Out the Reporting Period
If you’ve exhausted options for getting a charge off removed early, another choice is to simply wait out the credit reporting period. Charge offs and most negative information typically remain on your credit report for 7 years from the date of first delinquency.
You can check your credit reports to identify exactly when the charge off should fall off your credit history. Once past that 7-year mark, the credit bureaus can no longer legally report the debt, and your credit score should benefit from the removal.
The downside is needing to wait many years for the charge off to disappear. But the silver lining is time allows you to implement positive credit habits, such as making on-time payments, lowering credit utilization, and establishing new accounts responsibly. Good behavior helps gradually rebuild your creditworthiness.
Attempt Early Exclusion
In some limited cases, you may be able to petition for early exclusion to remove a charge off before the 7-year mark. This involves writing to the credit bureaus and essentially requesting a “clean slate” by having the negative mark excluded from your credit history.
Under the FCRA, the credit bureaus have the discretion to provide early exclusion in cases where outdated information is not relevant to a consumer’s current creditworthiness. However, charge offs within the past 5 years are rarely excluded early.
To potentially qualify for early exclusion, you must demonstrate a strong recent history of on-time payments, low utilization, new positive accounts, and overall financial responsibility. Even then, approval odds remain slim, so temper expectations.
File for Bankruptcy
As a last resort, filing for bankruptcy can remove charge offs by essentially wiping the slate clean on certain outstanding debts. Under Chapter 7 bankruptcy, qualifying debts can be discharged, including credit cards, medical bills, personal loans, and utility bills.
However, bankruptcy also carries downsides like high legal fees, damage to credit scores, tougher loan standards for future applicants, and public records. Weigh the pros and cons carefully before pursuing bankruptcy.
Consulting an attorney or credit counselor can help analyze if bankruptcy makes financial sense for your specific situation. Seek assistance from reputable sources like the Consumer Financial Protection Bureau (CFPB).
Beware Credit Repair Scams
As you seek to remove a charge off from your credit report, beware companies promising quick fixes or guaranteed results for an upfront fee. Many of these “credit repair” services overpromise and employ questionable tactics that bring little improvement.
Steer clear of any company asking for payment before services, advising you to misrepresent information, or telling you to obtain an Employer Identification Number (EIN) instead of your Social Security number. Those are signs of a scam.
You have the right under federal law to dispute credit report errors yourself for free. Save your money and be persistent contacting the credit bureaus directly. Legitimate credit counseling services also provide assistance for free or nominal fees.
- Verify any charge off is reporting accurately before disputing it.
- Negotiating pay for delete or a goodwill deletion may convince the creditor to remove a legitimate charge off.
- Allowing time for the 7-year reporting period to expire makes the charge off disappear.
- Early exclusion is difficult to obtain but can sometimes lead to early removal.
- Bankruptcy discharges debts but causes credit damage.
- Avoid credit repair scams and exercise your rights carefully.
Having a charge off ding your credit reports and scores can be frustrating. But with persistence and the right approach, you may be able to remove the negative item and rebuild healthier credit over time. Don’t give up hope for recovery.
- Consumer Financial Protection Bureau: Credit Reports and Scores
- myFICO: Charge Off FAQ
- Experian: How Long Does a Charged Off Account Stay on Your Credit Report?
- The Balance: What Is a Charge-Off?
How To Remove A Charge-Off From Your Credit Report
Having a charge-off on your credit report can be super frustrating. It’s like getting a big fat F on your financial report card. But don’t worry – there are ways to remove charge-offs from your credit report. This article will walk you through the steps so you can clean up your credit.
What is a Charge-Off?
First things first – what is a charge-off anyway? A charge-off happens when a creditor essentially gives up on trying to collect a debt from you. They take the unpaid debt off their books as a loss, which hurts their bottom line. Not cool. This usually happens after several months of non-payment. Once it’s charged off, the creditor will report it to the credit bureaus. Then it shows up on your credit report looking all nasty.
Charge-offs are one of the worst marks you can have on your credit because it makes you look super risky to future lenders. They’ll be worried you won’t pay them back either. But don’t freak out – having a charge-off isn’t the end of the world. Here’s what you can do:
Check Your Credit Report
First, pull out your credit reports from AnnualCreditReport.com and comb through them to find any charge-offs. Make note of:
- The creditor
- The amount of the debt
- The date it was first reported
This info will come in handy later when you try to remove it. If you find multiple charge-offs, don’t be discouraged. Just take it one step at a time.
Verify The Charge-Off is Legit
Mistakes happen all the time on credit reports – so make sure the charge-off is even valid. If it’s not a legit unpaid debt, you can dispute the error. Simply submit dispute letters to the credit bureaus saying this charge-off ain’t yours. Send them any proof you have too. The credit bureaus will investigate within 30 days and remove it if it’s incorrect.
Negotiate With The Creditor
If the charge-off is legit and you owe the money, try negotiating with the original creditor to remove it from your credit report in exchange for payment. This is called a “pay for delete” agreement. Call up the creditor and politely ask what it would take to delete the charge-off. Be super nice!
If you can pay the debt in full, explain that you can send payment right away if they agree to delete it from your credit report. If you can’t pay in full, offer a lump sum payment – maybe 30% to 50% of the amount owed. Having something is better than nothing for the creditor. Make sure to get any agreement for deletion in writing before sending payment.
Wait It Out
If the creditor won’t budge on removing the charge-off, you may have to wait it out. Charge-offs can legally stay on your credit report for up to 7 years. Luckily, the impact lessens over time. Keep making on-time payments and lowering your credit utilization, and your score will start to improve.
You can also ask the creditor to re-age the debt by making consistent payments over several months. This will change the status to “current” and make it look like you paid it off more recently. Way better than a charge-off!
Add A Note of Explanation
Did you go through a rough patch and rack up some charge-offs? When applying for credit in the future, include a brief note explaining the situation and how you’ve turned things around. This shows creditors you’ve learned from past mistakes.
For example: “During my college years I accumulated some charge-offs due to financial hardship. Since then, I’ve learned how to better manage my finances and have been rebuilding my credit for the past two years.”
Lenders may look on you more favorably if you acknowledge your slip-ups. Everyone makes mistakes, after all.
Focus on Rebuilding Credit
In addition to cleaning up charge-offs, work on rebuilding a positive credit history. Things that can counteract the negative impact of charge-offs include:
- Making on-time payments
- Keeping credit card balances low
- Having a mix of credit types (credit cards, loans, etc)
- Not applying for too much new credit at once
If you have no open credit accounts, consider becoming an authorized user on someone else’s credit card. Their good payment history will start to influence your credit. Or, secured credit cards require a refundable deposit and are easier to get approved for. Use them responsibly for 6 months to a year and you’ll likely qualify for an unsecured card.
Monitor Your Credit
Keep tabs on your credit reports moving forward to ensure:
- No new negative marks show up
- The charge-offs are removed after you pay them
- The charge-offs age off your reports after 7 years
You can use a free site like Credit Karma to monitor changes each month. Be vigilant and keep challenging errors – this will get you back on track.
Don’t Stress, Just Take Action
Charge-offs stink. There’s no way around it. But don’t let them keep you down forever. Roll up your sleeves, make a plan, and start fixing the problem. You’ve got this!
With some time and effort, you can remove those charge-offs and rebuild a stellar credit score. A few late payments or collections don’t have to haunt you. Take control of your financial situation. A clean credit report is just around the corner!