How to Get a Charge-Off Removed From Your Credit Report

A charge-off occurs when a creditor determines that a debt is unlikely to be collected after a period of non-payment. This typically occurs after 120 to 180 days of missed payments. Once an account is charged off, the original creditor considers it a loss.

Despite being written off, the debt is not forgiven, and the consumer remains legally obligated to repay it. A charge-off represents a severe delinquency and can significantly impact a credit report and overall credit score. This negative mark makes it more challenging to obtain new credit, loans, or housing.

Verifying Charge-Off Details on Your Credit Report

The initial step in addressing a charge-off involves reviewing your credit reports for accuracy. Consumers are entitled to a free copy of their credit report from each of the three major nationwide credit reporting agencies: Experian, Equifax, and TransUnion. These reports can be accessed through AnnualCreditReport.com.

When examining your credit reports, locate any charge-off entries. For each charge-off, verify specific details to ensure they are correct, including:
The original creditor’s name
The account number
The precise amount charged off
The date of the charge-off (typically when the account was declared a loss)
The date of last activity

It is also important to note the status of the charge-off, whether it is listed as unpaid or paid. Sometimes, a charged-off debt may be sold to a debt buyer or transferred to a collection agency, which could result in the entry appearing twice on your report, once from the original creditor and once from the collection entity.

Strategies for Addressing an Accurate Charge-Off

If the charge-off information on your credit report is accurate, several strategies can mitigate its impact. An accurate charge-off remains on a credit report for seven years from the date of the first missed payment that led to the delinquency. This seven-year period applies even if the debt is later paid, though its status will change to “paid” or “settled.”

Negotiating payment with the original creditor or the collection agency that now owns the debt is one common approach. You can either pay the full outstanding balance or negotiate a settlement for a lesser amount. Paying the debt in full updates its status to “paid” or “paid in full,” viewed more favorably by lenders than a “settled” status. Paying in full also avoids potential tax implications, as forgiven debt from a settlement might be considered taxable income by the IRS.

Alternatively, settling the debt for less than the full amount can still be beneficial, especially if full payment is not feasible. A settlement updates the credit report status to “settled for less than full amount” or “settled in full.” While settling may not have as positive an impact as paying in full, it is still better for your credit than leaving the charge-off unpaid, as it demonstrates an effort to resolve the debt. Negotiated settlements are often paid as a lump sum, but a reduced payment plan might be possible.

Another strategy is requesting a goodwill deletion from the original creditor. This is a request to remove the charge-off from your credit report as a gesture of goodwill, even though the information is accurate. This approach is often more successful for isolated late payments or minor delinquencies, especially with a strong payment history. When crafting a goodwill request, take responsibility for the missed payment and briefly explain the circumstances that led to it, such as a medical emergency or job loss. Highlighting your consistent on-time payments since the incident and your long-standing relationship with the creditor can strengthen your request. Creditors are not obligated to grant goodwill deletions.

Disputing an Inaccurate Charge-Off

If your review of credit reports reveals an inaccurate charge-off, initiating a dispute with the credit bureaus is the appropriate course of action. You have the right to dispute incorrect information on your credit report for free. Disputes can be filed online, by mail, or by phone with Experian, Equifax, and TransUnion. If the inaccuracy appears on multiple reports, a separate dispute should be submitted to each relevant bureau.

When filing a dispute, gathering supporting documentation is important to substantiate your claim. This evidence can include payment records, bank statements, or any correspondence with the original creditor that demonstrates the inaccuracy. If the charge-off is a result of identity theft, a police report or a Federal Trade Commission Identity Theft Report can serve as important evidence. Send copies of documents rather than originals, and retain your own records of all communications.

Once a dispute is filed, the credit bureau is required by federal law to investigate the claim within 30 days, or up to 45 days if additional information is provided or if the report was obtained through AnnualCreditReport.com. The bureau will contact the data furnisher, such as the original creditor, to verify the accuracy of the disputed information. The furnisher is then obligated to conduct a reasonable investigation.

Potential outcomes of a dispute include the charge-off being updated, removed, or verified as accurate. If the investigation confirms the information is inaccurate or cannot be verified, the credit bureau must correct or remove the entry from your report. The credit bureau will notify you of the investigation’s results within five business days of its completion. If the furnisher maintains the information is accurate and the dispute is not resolved to your satisfaction, you have the right to add a statement of dispute to your credit report explaining your position.