A charge-off on your credit report is one of the most detrimental entries you can receive (second only to bankruptcy). Just one negative entry on your credit report is enough to drop your credit score significantly. Rehabilitating these entries on your report is the first step to rebuilding your credit worthiness.
What Are Charge-Offs?
A charge-off occurs when an account is seriously past due. The account will be reported to the credit bureaus as unpaid when it is 30, 90, 120, 150 and 180 days past due. At 180 days past due, the entry on the credit report will be changed from "past due" to "charged-off." A charge-off declares the creditor of the account deems the account a loss. Charge-offs will remain on your credit report for seven years, and paying the account will not remove it from your credit report. However, a paid charged-off account entry is less detrimental to your credit report than a charge-off itself.
Pay Charged-Off Accounts Immediately
To help speed the process of the removal of a charge-off account on your credit report, it should be paid in full immediately. Before paying the account, send a letter of removal to the creditor of the account asking that they remove the entry from your credit report within 10 days of receiving payment for the balance of the account. Require the creditor to respond to your letter in writing, stating that it agrees to remove the entry from your credit once it receives payment. Once you have the company's written promise to remove the entry from your credit report, send payment for the account.
Dispute Inaccurate Information on Your Credit Report
Check your credit report for duplicate entries of the same account from different collection companies. Debt collection companies have a habit of selling and reselling delinquent accounts. Every time your account switches hands, a new entry on your report may be created. If duplicate entries are found, dispute them as soon as possible with the credit bureaus to have them removed.
Wait It Out
It may take some time to have charge-offs disappear from your credit report. While you are waiting for a resolution, continue paying all current accounts on time and paying down any loans or credit card debt you may have. Keeping your current accounts in good standing will help you rebuild your credit score and your credit worthiness in the future.
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