How to Change Charge Off to a Good Tradeline

Replacing a charged-off account with a good trade line takes time and money. Creditors charge-off delinquent accounts when you fail to pay on a debt for an extended period of time. Charged-off accounts are often sold to collection agencies, and you cannot re-open a charged off account. However, if you work with your creditor and the collection agency to settle the debt then you can eventually establish a new credit account. Charged-off accounts remain on your credit report for up to seven years, but as time goes by, older accounts have less of an impact on your credit score.

Instructions

1

Contact the collection agency or the creditor that owns the charged-off account. Find out how much you owe on the debt including penalty fees and interest. Ensure that you have the correct mailing address for the collection agency.

2

Go to your bank. Make a cash withdrawal of the exact amount of money that you need to settle your charged off account. Ask the bank teller to convert the cash into a cashier's check made payable to the collection agency or creditor that owns the debt.

3

Mail the cashier's check to the debt holder. Make arrangements to settle any other delinquent or charged-off credit accounts you have. Contact each creditor a few weeks after you make your payment to ensure that each debt has been settled.

4

Order your free credit report from each of the national credit reporting agencies: Equifax, Experian and TransUnion. Review the reports to ensure that the charged-off accounts now show as having been paid in full. If necessary, contact the credit reporting agencies with evidence of the payoff.

5

Pay your bills on time and try to keep low balances on your revolving debts such as credit cards and home equity lines. After several months of paying your debts on time, you can re-apply for a new credit line with the creditor that previously charged off your debt. If possible, ask someone with good credit to act as a co-signer on your application in order to improve your chances of getting approved.