How Many Years Does a Charge-Off Stay on Your Credit?

A charge-off occurs when a creditor determines that a debt is unlikely to be collected and writes it off as a loss. This happens after a consumer has missed several payments. A charge-off on a credit report indicates serious delinquency to potential lenders. While the creditor no longer expects to collect the debt directly, the consumer remains legally responsible for the amount owed.

Credit Reporting Duration

A charge-off generally remains on a consumer’s credit report for seven years, a timeframe mandated by the Fair Credit Reporting Act (FCRA), a federal law that governs how long negative information can appear on credit reports. The reporting period begins from the date of the original delinquency, which is the date the account first became past due. This start date applies regardless of when the creditor officially charges off the account, which typically happens after 120 to 180 days of non-payment. The seven-year duration holds even if the debt is later paid, settled, or sold to a collection agency. For example, if an account first became delinquent on January 1, 2020, the charge-off will be removed from the credit report around January 1, 2027.

Impact on Creditworthiness

A charge-off significantly harms a consumer’s credit score and overall creditworthiness. Payment history accounts for a substantial portion of credit scoring models, typically around 35% of the FICO score. A charge-off signifies a severe breakdown in payment obligations, indicating a high level of risk to lenders, and can substantially lower a credit score by 50 to 150 points or more. This reduction makes it more challenging to obtain new credit, secure favorable interest rates on loans, or qualify for renting an apartment or certain types of employment. While the charge-off itself is a serious derogatory mark, the preceding months of missed payments also contribute to the score decline, though its impact tends to lessen over time as it ages on the credit report, even before it is entirely removed.

Locating Charge-Offs on Credit Reports

Consumers can access their credit reports to identify charge-off entries. The official federal website, AnnualCreditReport.com, provides a free copy of reports from each of the three major nationwide credit bureaus—Equifax, Experian, and TransUnion—once every 12 months. Once a report is obtained, look for accounts listed with a status such as “charged off,” “written off,” or “account closed by creditor.” These terms indicate that the debt has been deemed uncollectible by the original creditor. It is important to locate the “date of original delinquency” or “date of first delinquency” associated with the charged-off account. This date is crucial for understanding when the seven-year reporting period began and when the item should eventually fall off the report.

Credit After Charge-Off Reporting Ends

When a charge-off reaches the end of its seven-year reporting period, it is removed from the credit report. Once removed, the charge-off is no longer visible to lenders and will no longer directly affect the credit score, which can lead to an improvement in the credit score. While the charge-off itself disappears, other negative information, such as individual late payments, might have their own reporting periods. The removal of a charge-off does not automatically guarantee an excellent credit score; consistent on-time payments and responsible credit management are still necessary to build and maintain a strong credit profile over the long term.