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Remove Charge-Offs From Your Credit Report

Ali Zane is a credit repair expert, advocate, and author with nearly 20 years experience getting positive results for his credit repair clients.
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When it comes to improving your credit score, you may have heard about the term “charge-offs” and how they can affect your ability to get a loan or even some employment opportunities. However, there is more information that people should know regarding how to remove charge-offs. This blog post will provide an introduction to what charge-offs are and what steps you need to take if you find them listed in your credit report so that you can improve your overall credit score.

If you have ever had a credit card or loan that went into default, it’s likely that your creditor has charged-off the debt to get rid of it. However, this charge-off doesn’t mean that you are no longer responsible for the debt, and if not taken care of properly can result in major negative consequences on your credit report. Find out what needs to be done to remove these damaging marks from your record.

What Are Charge-off Accounts?

It’s one thing to fall behind on your bills. But if an individual has not made a payment in over 180 days, then their creditor will report that they are charge-offs and this can have very negative effects on the credit score – sometimes reducing it by up 100 points!

Charge-offs are always a huge issue for credit scores and can have dramatic effects on your score. The higher the number of charge-off accounts you have in combination with other negative marks like late payments or unpaid debts; it will take longer before getting approval for loans again due to these not being resolved properly when applying previously. Removing charge-offs are important for restoring a good credit score.

A newly incurred charge off (NCO) impacts an account very negatively – sometimes only one instance is enough to drastically impact a credit score.

Does A Charge-off mean the amount is no longer due?

A charge-off status simply means the creditor was unable to get a payment from the consumer for over 180 days, after which by law they were required to report it as bad debt. This does not mean that an account has been forgiven or released; creditors can legally still try collecting throughout any applicable statute of limitations and also file suit in court if necessary through judgments against debtors themselves.

How Long Can a Charge-off be Collected on for?

You may be surprised to learn that your state’s statute of limitations on debts doesn’t necessarily stop a creditor from collecting their money. As long as the account is within this time limit and they meet certain criteria (such as making reasonable efforts), it can still legally go after yours or someone else’s assets for payment!

How Long Does a Charge-off Stay on the Credit Report for?

A charge-off account will appear under the negative column of your credit report for up to 7 years from when last payment was due. You can figure out this date by looking at what history there is on file and finding any late payments reported within 30 days before, which gives an estimated removal date in about 10 more months if nothing else happens between now and then.

Should you Payoff or Settle a Charge-off?

If the charge-off is valid and accurate then you can look into settling your debt. Major banks such as Citibank, Chase, Bank of America, or Wells Fargo often settle for 20% less than what they originally charged off but this may vary depending on how much was owed when it became a delinquent account.

The statute usually expires in five years if there are no negotiations by either party after two decades have passed since an original creditor issued a payment request letter with a demand to repay terms.

For low amounts, creditors are unlikely to reduce the settlement. For instance, if your charge-off amount is $300 then it’s not likely you’ll get more than this from them as a refund. They might delete an unrecognizable account from one with frivolous information attached but credit report will still show that there was indeed money paid somewhere so don’t count on getting rid of those negative items just yet.

Does Paying to remove a Charge-off Increase your Credit Score?

Charged-off accounts are not going to be deleted from the credit report even if you offer to pay them. So it’s important for creditors and borrowers alike, that there is enough information provided when negotiating with a lender who has excess charge-offs on their books of business – because they can’t remove these debts any faster than usual!

How to Delete a Charge-Off from a Credit Report?

A charge-off account may be removed from a credit report under any of the following circumstances using this special dispute letter, and using the specific dispute reasons listed below:

Unrecognizable Account: If the account in question is one you do not recognize, the account can be disputed as such. You will need to dispute the account as “no knowledge of account.”

Fraudulently Opened Account: If you are certain the account is indeed fraudulent, where an identity thief opened an account without your knowledge, then you will need to file identity theft reports. These will need to be filed with the Federal Trade Commission and the local authorities. After which you will need to forward these reports to both the creditor and the credit bureaus in order to dispute the account as a “Fraudulently opened account.”

Fraudulent Charges on Account: If you incurred fraudulent charges on an account you opened that led to late, then the item can be disputed under the Fair Credit Reporting Act under the provisions afforded to fraud victims. You will need to file the requisite fraud reports, as described in the section above for fraudulently opened accounts. You will be disputing this item as having “ incurred fraudulent charges” and would specifically need to point out the fraudulent charges. Then you will need to submit the fraud reports to the credit bureaus and the creditor.”

Incorrect Amount, Last Payment dates, Payment history: If the account or any data pertaining to it, such as high credit, last payment date, or charge-off amount is reporting incorrectly, then the specific part of the account may be disputed with the credit bureaus. This may result in the complete deletion of the account if the information is not verifiable. In the event, the account is not reporting as a charge-off and simply just showing late payments then you can take this issue up directly with the creditor.

If you were an authorized user on the account:
In this case, the account may be disputed with the three credit bureaus. There would be a high chance of removal for this type of account. You can dispute the item as “was authorized user on the account, please delete.” In addition, it would be advised to call the creditor directly and ask you to be taken off the account as an authorized user.

For Debts That Were Paid Over 7 Years Ago:
If you believe the account was last paid over 7 years ago, the account may be disputed under the 7-year statute for credit reporting and will be removed by the credit bureaus. You can dispute the account as “account for over 7 years old, please remove.” Keep in mind the 7 year period starts from the time of the last payment on the account and not from the account opening date.

The Final Step: Take Action to remove charge-offs

What can you do about that problem?

You’ve had the charge-off for too long and it needs to be removed, now. If your hands are tied or if this is overwhelming then maybe hiring a credit repair specialist will help; they have more experience with these issues than we could ever hope to achieve in just one lifetime! The sooner action begins, means better the chances of success.

 

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