When the creditor does not believe they will be able to recover a debt, they declare the debt a loss and report it is a "charge-off" on your credit report. The charge-off will remain on your credit report for at least seven years once it appears. Charging off a debt does not eliminate your responsibility to pay. Once a charge-off is on your credit report, it does not disappear even after you have paid the debt. However, if there is a reporting error or discrepancy, the credit bureau may delete the debt.
Visit the website annualcreditreport.com to obtain a free copy of your credit report from each of the major credit bureaus. If a lender has denied you credit, you have a right to receive a copy of your credit report. If a bank turned you down for a credit card or a loan, you should receive a letter in the mail from the credit bureau explaining how to request a copy of your report.
Review the credit report for errors or discrepancies. Pay close attention to the balances, dates and names of creditors. If a debt does not seem familiar, your original creditor may have sold the account to a third-party collection agency.
File a dispute with each creditor that reports the charge-off if the information is incorrect. When you dispute the debt, the credit bureau will launch an investigation. The creditor must produce evidence to show you actually owe the debt and that the balance is correct. If the creditor does not respond within 30 days, the credit reporting agency deletes the debt from your report. If the investigation proves the information reported was incorrect, the credit bureau must correct it.
Contact the original creditor to negotiate paying off the debt. If creditor sold the debt to a collection agency, you will need to deal directly with them instead. You can name the amount you are willing to pay in exchange for the debt's deletion from your report. If the creditor is unwilling to delete the debt, ask them to report it as "paid as agreed," rather than "settled."
Ask for the agreement in writing. If you are able to reach an agreement, get it in writing before making a payment. You will need this documentation in case the creditor does not delete or report the debt as agreed.
Pay the debt as agreed. After paying off the debt, the creditor should report the payment to the bureau.
Check your credit report again in about 60-90 days. The account may be deleted or updated sooner, depending on how often the creditor reports to the bureaus. If the credit reporting agency has not updated the debt, contact the creditor to find out when you can expect to see the change.
File a dispute if the creditor does not hold up their end of the agreement. Submit a copy of your written agreement from the creditor and proof of payment, such as a copy of the returned check.
- Nolo: How to Dispute Credit Report Items With the Creditor or Collector
- Bankrate.com: Erase a Charge-Off From Your Credit Report
- MyFico: Credit Reports - Know My Rights
- Experian: "Paid in Full" Charged Off Account is Better Than "Settled for Less Than Owed"
- Discover. "What Is Credit Card Charge Off?" Accessed Dec. 9, 2019.
- Equifax. "What Is a Charge-Off?" Accessed Dec. 9, 2019.
- Capital One. "Credit Card Charge-Off," Accessed Dec. 9, 2019.
- Experian. "What Is a Charge-Off?" Accessed Dec. 9, 2019.
- Lexington Law. "What Is a Charge-Off?" Accessed Dec. 9, 2019.
Jeannine Mancini, a Florida native, has been writing business and personal finance articles since 2003. Her articles have been published in the Florida Today and Orlando Sentinel. She earned a Bachelor of Science in Interdisciplinary Studies from the University of Central Florida.