Are Charge-offs Supposed to Be Removed From a Credit Report?

Of all the negative information you can have on your credit report, a charge-off is one of the worst. It can be hugely detrimental to your credit score. It tells potential lenders that you cannot be trusted to pay back your debts. A charge-off stays on your credit report for seven years before automatically falling off. It is possible to remove it from your report before it expires, but not everyone is successful. You can improve your credit score by paying off the debt.

Charge-Offs

A charge-off on your credit report means that the account is past due and the lender has written it off the books, counting it as a loss. If you haven't paid your bill for 180 days, the status of that account will show as "charge-off". That doesn't mean that you are no longer responsible for that debt. It does mean that you won't be able to use that account to make further purchases. You can avoid a charge-off by paying at least the minimum due amount each month.

Paying Off a Charge-Off

If you pay off the debt, the status on that account will change from "charge-off" to "payment made/after charge-off". While that is an improvement, it doesn't change the fact that for the next seven years, your credit report will show that you were delinquent. It will hurt your credit score significantly, making it difficult and expensive to get a loan or a credit card.

Negotiating With the Lender

You cannot remove the charge-off from your credit report, but the lender can. Some lenders are more willing to do so than others. Whether they will depends on various factors, including your credit history with them. The best thing to do is to contact the lender before paying off the account. Offer to settle the debt in full in exchange for the creditor removing the charge-off. The lender is under no obligation to agree, but if you are polite and professional in your negotiation, the creditor may oblige.

Tips

It would help the negotiation to have a long-established history with the lender. The lender is more likely to remove the charge-off if you can show that it's a one-off mistake on your part, rather than part of a pattern of non-payment. If you do get an agreement, request a copy of it in writing. That way, if the charge-off is not erased, you can go back to the lender and complain.

Errors

Lenders are not perfect, nor are credit bureaus. Sometimes they make mistakes that can end up on your credit report. If you spot a charge-off on your report that you do not recognize, you can dispute it directly with the bureau via the bureau's official website. You may also want to contact the lender and ask that the mistake be fixed. The lender or credit bureau may ask you for proof, such as a canceled check or a copy of your bank statement, before deciding on your claim.