How to Remove Charge-offs from Your Credit Report

A charge-off is a debt that is considered uncollectible by the original creditor and is subsequently written off. Charge-offs are classified as 'bad debts' on the creditor's income statement and are removed from the balance sheet. When a creditor charges-off your account, they're declaring your debt as a loss for the company. The creditor then usually sells or assigns the bad debt to a collection agency.

Typically charge-offs occur after six months of non-payment, but sometimes much sooner. Many people mistakenly think when a debt has been charged-off that it's been canceled by the creditor. This is not true. You are still responsible for paying off the debt. Your creditor will almost always add a negative entry to your credit report and continue to attempt to collect on the debt. Charge-offs remain on your credit report for seven years from the date the account was first reported.

Paying an old charge-off will not remove it from your credit reports. It will simply be updated to a "paid charge-off," which, while slightly better, is still a seriously derogatory item. To qualify for some loans, including a mortgage loan, you must take care of any charge-offs that appear on your credit report.

To remove a charge-off from your credit report, you must dispute the account with the credit bureaus. If after numerous disputes the credit bureaus verify the account, you must contact the collector. All negotiations should be in writing. You will likely need to begin on the phone to determine the correct person with whom you should be negotiating. However, once you know who that person is, send everything in writing and request they do likewise.

Negotiate with the collection agency to remove their listing entirely from your report. A charge-off is a negative, whether it is paid or not. Make sure you get this agreement in writing as well.

Learn more about how to remove charge-offs and other negative listings from your credit reports at the credit repair forum!