A charge-off is a very damaging item to have reported on your credit report. Charge-offs occur when you fail to repay a loan for a significant portion of time. Once your credit report has a charge-off on it, you should take any steps you can to remove it, as it will significantly affect your chances of getting additional credit.
Charge Offs
A charge-off occurs when a creditor determines that an uncollected debt is no longer an asset. Charge-offs do not mean that you no longer have the responsibility to repay the debt, but merely that your creditor has changed how it categorizes the debt. Typically, creditors do not list an account as a charge-off until a debtor has failed to make a payment for a significant amount of time.
Credit Report
All your activity as a credit user gets included on your credit report. If you have a charge-off on your report, this greatly lowers your credit score, as does the late payment reports and collection agency reports that typically accompany a charged-off account. You can inspect your credit report for free each year by visiting the Federal Trade Commission's authorized credit report website: annualcreditreport.com.
Errors
Credit reports commonly have errors on them, and it is possible that your report could contain a charge-off that is not supposed to be there. If you do find an error on your report, you can demand that the credit reporting agency that issued the report remove the information. You must be able to prove that the report is in error, typically by providing the credit reporting agency written proof that backs up your claim.
Timeline
If a legitimate credit card charge-off appears on your report, you have some recourse if the charge-off has been on your report for more than seven years. If a charge-off record still appears on your report after seven years and 180-days from the date it was first reported, you can demand the reporting agency remove the item in the same way as you would an error.
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