How Long Do Charge Offs Stay on Your Credit Report?

A charge-off indicates a debt a creditor has written off as a loss. This article clarifies the reporting period for charge-offs and their impact on creditworthiness.

What a Charge-Off Means

A charge-off occurs when a creditor, such as a bank or lender, determines that a debt is unlikely to be collected. This happens after an extended period of non-payment, often between 120 to 180 days past due. While the creditor removes the debt from their active accounts and writes it off as a loss for accounting purposes, this action does not forgive the debt. The consumer remains legally obligated to repay the amount owed.

After an account is charged off, the creditor reports this status to the major credit bureaus, including Experian, Equifax, and TransUnion. This negative entry then appears on the consumer’s credit report, signaling to other potential lenders that the original creditor ceased collection efforts. Often, charged-off debts are sold to third-party collection agencies, who then pursue repayment from the consumer.

The Reporting Period for Charge-Offs

A charge-off remains on a consumer’s credit report for seven years plus an additional 180 days from the date of original delinquency. This period is mandated by the Fair Credit Reporting Act. The “date of original delinquency” (DOOD) is the starting point for this seven-year clock. It refers to the date the account first became delinquent and was never subsequently brought current.

This means the seven-year reporting period begins from the first missed payment that led to the charge-off, not the date the account was officially charged off by the creditor. For example, if a payment was first missed in January and the account was charged off in June, the seven-year period starts in January. Paying a charged-off account does not remove it from the credit report sooner. Instead, its status will update to “paid charge-off” or “settled charge-off,” which is viewed more favorably by lenders than an unpaid charge-off, but the negative entry still remains for the full reporting period.

How Charge-Offs Affect Credit Scores

A charge-off has a negative impact on a consumer’s credit score. It signals to future lenders a high risk of default, as it indicates a failure to repay a debt. Payment history accounts for around 35% of a FICO score, making charge-offs damaging. The severity of the score drop can vary based on the consumer’s credit history prior to the charge-off and the amount of the debt.

While a charge-off remains on the credit report for seven years plus 180 days, its negative influence on the credit score lessens over time. The impact is most severe immediately after the charge-off occurs and gradually diminishes as the entry ages on the report. Maintaining positive credit behaviors, such as making on-time payments on other accounts, can help mitigate the long-term effects of a charge-off.

Reviewing Your Credit Report for Charge-Offs

Consumers should regularly review their credit reports to identify any charge-offs and ensure accuracy. Free annual credit reports are available from each of the three major credit bureaus—Experian, Equifax, and TransUnion—through AnnualCreditReport.com. This website allows consumers to obtain their reports once every 12 months from each bureau.

When reviewing the report, look for entries marked as “charge-off” under the account status, noting the original creditor, account number, and the date of original delinquency. If any information appears incorrect, such as an inaccurate amount, an incorrect date of original delinquency, or an account that does not belong to you, it is important to dispute it. Disputes can be filed directly with the credit bureaus online, by phone, or by mail. The bureaus are required to investigate disputes within 30 days.