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Expert Ways on How to Remove a Charge Off from Your Credit Report
What is a charge off on your credit report?
A charge off is when a creditor writes off a debt for accounting purposes, usually after a period of several months of non-payment. A charge off on your credit report tells other creditors that you have been unreliable in the past, and that former creditors have been unable to collect money due. It's considered a serious sign of delinquency, and some creditors are unwilling to extend credit to people who have a charge off in their past.
A charge off also affects your credit report by causing your credit score to drop, sometimes significantly. If you have an opportunity to remove a charge off from your credit report, you should take it.
Can I delete a charge off on my credit report?
Unfortunately, a valid charge off may remain on your credit report for up to 7 years. You can dispute inaccurate items on your credit report, but if you choose to dispute a valid charge off, your chances of successfully having it removed are slim. The only circumstances under which you have a chance of getting a valid charge off deleted by the credit bureau would be if the date of the charge off is incorrect, and you dispute the item. If the credit bureau cannot verify that the date of the charge off is correct, they may remove the item. This could be useful if a creditor has sent your charge off account to a collections agency. Some collections agencies re-date the charge off account when they take action or receive the account, so it may appear more recently on your credit report than when the charge off actually occurred. Pay close attention to the date of last activity, or DOLA, as an inaccurate DOLA is your best chance to get a charge off deleted from your credit report with no further action required on your part. However, even with a correct DOLA, it's possible to remove a charge off from your credit report - it just takes a little more work.
How to remove a charge off from your credit report.
If the charge off on your credit report is accurate, your best chance of removing the charge off from your credit report is in negotiation with the original creditor. If you were unable to pay an account due to financial hardship, but later regain the money to pay the account, you can approach the original creditor with an offer of repayment in exchange for removing the charge off status of your account. Request that the creditor mark the account "paid as agreed." If you do not request that the creditor note your account in this way, the creditor will likely change it to "paid charge off" - which still affects your credit report. At the very least, have the creditor remove the charge off - and under a best case scenario, a creditor will mark your account "paid as agreed" - which will actually boost your credit score.
Get an agreement in writing before you pay the creditor.
Once you've given a creditor your money, you've lost all of your power to negotiate. Get the agreement in writing before you give the creditor any money. If the creditor has sent your account to a collections agency, you may still need to negotiate with the creditor directly to have the status of your account changed on your credit report. Collections agencies can remove their entries on your credit report, but not the original charge off. Only accept an agreement to remove the charge off from the original creditor, as the original creditor is the only person who can act on this agreement.
Beware the pitfalls of negotiating debt.
First and foremost, don't get pressured into agreeing to terms that aren't acceptable to you. If you can only afford to pay part of the debt up front and the rest on an ongoing basis, stick to your payment plans. Don't let a creditor or collection agency pressure you into agreeing to repay more than you can afford, because that's just an invitation to default on your account again and could further impact your credit report. Also be alert to the fact that if you contact the creditor or collections agency, they can update your account information on your credit report to reflect a current DOLA. This could actually drop your credit score if the original charge off account was several years old, as new default activity has more of an impact on your credit. If you do contact a creditor to settle a charge off account, try to resolve it quickly or do it in a time when you know you won't need to apply for new credit until the situation is resolved.
For more information on disputing items on your credit report or how you can make the DOLA work for you, check out the Credit Secrets Bible.