What is a charge off on credit report?

A charge off on a credit report can be defined as a creditor’s declaration that they are unable to collect your debt. This usually happens when you become quite delinquent on a certain debt. In most cases, this is usually declared by debtors if you go for 6 months without making any payment.

The charge off is usually among the worst items that you will ever have on your credit report. This usually occurs if you don’t make any payment on the credit card payment for a period of several months. After going for several months without making any payment, the creditor will write the debt off as a loss, cancel the account and demand a payment of the balance that is past due fully. Once the account has been fully charged off, the credit score will have suffered quite a significant damage.

The issuer of the credit card may also have lowered the limit on the credit card. In case you applied for the credit card in months before the charge-off, this may have caused the rejection of the application. The moment you get a charge off on the credit report, it is supposed to remain there for a period of 7 and half years from the charge off date. This is definitely a long time for having a negative entry on the report.

You are still not off the hook

A common misconception that people have is that once there is a charge off, they are not responsible for paying it. As long as it remains unpaid, the creditor will still continue to attempt collecting the account and may even sue you for the same. Future lenders and creditors tend to take the charge-off in a serious way to a point where they can deny future loan applications and credit card. This means that the best thing you can do is to remove the charge-off from the credit report. There is need for negotiations if you want to reduce the effects of a charged-off account.

 Talking to creditors

 

In most cases, the charge offs are usually passed to the third party debt collectors immediately after the charge off date. However, when dealing with the charge offs, a good idea would be to negotiate with the original creditor rather than the debt collector.

In order to remove the charge-off, it is advisable to get in touch with the original creditor and begin the negotiation for getting rid of the charge off. Your goal is to convince your creditor to get rid of the charge off in the report and you promise to pay. Before getting in touch with the creditor, it is important to determine the amount that you are able to pay for that account. The more you are able to pay, the better your negotiation power. You need to speak to someone who is able to negotiate the removal of the charge off on the credit report.

You will need to explain to the creditor that you are ready to pay that account and would like to arrange on how to make the payment. On their part, they will need to remove that charged-off status from your report. Always remain professional and polite when doing that. Do not blame the creditor or make any excuses. Ensure that you remain professional and to the point. If all goes well, the creditor will not have a problem removing the charge off from the credit report. If you want to negotiate better, you can send a pay for delete letter which will ask the creditor to remove the charge off and you will pay the full amount.