Creditors use different reporting codes to report the status of a debt to the credit bureaus which then insert that code into your credit report. An R9 indicates that a debt has been charged off due to non-payment.
Significance
An R9 is considered to be a derogatory notation and will result in a lower credit score.
Time Frame
Most creditors will assign a delinquent account an R9 status and charge it off after 180 days pass without any payment being made on the debt. The account will continue to report as a charge-off for another seven years. After this time frame the R9 account will be removed from your credit file.
Considerations
Paying the defaulted debt after it has been charged off will not alter the debt's R9 status. A paid-off R9 account does, however, look better to future lenders than one that is left unpaid.
Effects
You can be sued for a debt that has been charged off. Should your creditor win the lawsuit, a judgment will then appear on your credit report. A judgment is also a derogatory entry and will damage your credit score further.
Options
If the charged-off debt does not belong to you, you have the legal right to dispute the appearance of the R9 account on your credit report with each credit bureau that is reporting it.
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