When you request a copy of your credit report, you see various entries from creditors. If you’ve had trouble with a credit card account, you could have a “Charged Off” notation on your report. A credit card charge off can have serious implications for your credit score, and you will need to take steps to resolve the situation.
The creditor will only wait so long for you to make payments and bring your account back to current status. Typically, if you ignore your payments for 180 days, your account will reach the point of being charged off. Charging off an account means that the creditor closes your account and declares it a loss. The creditor receives a tax deduction for an uncollectible debt from the Internal Revenue Service. Creditors either hire a collection agency to collect the debt or sell the debt to a collection agency. Either way, you should still expect collection efforts to ensue for the collection of the debt.
Count Forward Seven
Your credit report show negative credit information for seven years. The seven years begins from the original date your account became late -- the date of your first missed payment. This original delinquency date applies for deletion of the information from your credit report even if your debt goes to a collection agency.
A charge-off status on a credit report includes a notation of “Settled,” “Paid” or “Unpaid.” A settled charge off indicates that you negotiated with the creditor for alternative repayment terms and satisfied the terms to settle the debt. A paid charge off indicates that you paid off the entire debt and you no longer owe the creditor any money. An unpaid charge off indicates that you still owe the money. Ranking from the best-to-worst scoring scenarios, paying off the charge off is most advantageous; settling comes in second and leaving an unpaid charge-off on your credit report causes the most damage.
If serious credit problems result in a bankruptcy, your creditors should update the charge offs on your credit report to read “Discharged in Bankruptcy.” The charge-off entry carries more negative weight than a bankruptcy entry. About six months after your bankruptcy judgment, request copies of your credit report from the three major credit bureaus so you can check the information. If you find charge offs remaining for debts that were included in the bankruptcy, contact the creditors to request the notations be updated.
- Experian: Defining 'Charge Off'
- Credit Infocenter: Interpreting Your Credit Report
- Experian: When Negative Information Will be Removed From Your Credit Report
- Bankrate: Yes, Pay Off That Old Debt
- Katz and Wulff Attorneys at Law: Life After Bankruptcy
- Equifax. "What Is a Charge-Off?" Accessed Oct. 11, 2020.
- Experian. "Collections on Your Credit Report." Accessed Oct. 11, 2020.
- Experian. "How to Remove Bankruptcy From Credit Report." Accessed Oct. 11, 2020.
- Experian. "How Long Does a Foreclosure Stay on Your Credit Report?" Accessed Oct. 11, 2020.
- Experian. "How Long Does It Take for a Repossession To Come off Your Credit?" Accessed Oct. 11, 2020.
- Experian. "Tax Liens Are No Longer a Part of Credit Reports." Accessed Oct. 11, 2020.
- Experian. "Judgments No Longer Included on a Credit Report." Accessed Oct. 11, 2020.
Kathryn Hatter is a veteran home-school educator, as well as an accomplished gardener, quilter, crocheter, cook, decorator and digital graphics creator. As a regular contributor to Natural News, many of Hatter's Internet publications focus on natural health and parenting. Hatter has also had publication on home improvement websites such as Redbeacon.