Charges Offs and How to Remove Them From Your Credit Report

credit tension

What is a Charge Off?

Contrary to what it may initially sound, a charge off is a negative item on your credit report. Although a charge off in your balance sounds like debt or another obligation has been taken off from your account, it isn’t that way. In fact, an according to credifulcharge-off is one of the things that can damage your credit report the most. A charge off is what a creditor calls it when a borrower hasn’t made a payment in a timely manner. This timeframe is usually 6 months for credit card payments and most debt, and 4 months for installment loans.

What Happens When You Have a Charge Off?

Obviously, your creditor has the right to collect what you owe them. When the debt is relatively small – below $2,000 -, they will hire a debt collection agency to do that work. When the amount is higher than the above stated, the creditor can file a lawsuit to recuperate the money.

Why Do Charge Offs Ruin Your Financial Reputation?

A charge off indicates that you don’t pay your debts on time. This will show on your credit report and other financial institutions will be well aware of this fact. If you want to get a credit in the future, a charge off will make it very hard for you to get it. In fact, some may ask you to have it removed to do the loan application process. On top of that, you may have to deal with unfriendly debt collectors which is a nuisance in and of itself.

How To Remove a Charge Off From Your Credit Report?

charge off damage on credit-reportNow that you know how harmful a charge off can be to your financial reputation, it is time to go through the process of removing it. The best way to do so is to talk and negotiate with your original creditor given the fact that he is the only one in charge of reporting the charge off to the credit bureau. The first thing you have to tell the creditor is that you are interested in paying the whole amount owed if they remove the charge off status from your credit report.

By doing this, you will get their attention since this is what they finally want. If you have all the amount of money you owed, you are at a better position to negotiate. However, even if you don’t have all the money, you can also propose payment terms that you can afford to pay. Remember to always speak politely and clearly, and never raise a controversy on the issue as this will hurt your chances of having it removed.

Another way to remove it is to send a pay for delete letter. You can learn how to draft a credit repair letter here. This letter should tell the creditor that you want your charge off remove in exchange of the proper payment. Make sure to give the letter to a person that has a high position in the company. If the creditor doesn’t seem to accept your offer, ask them to at least change your status to “closed” instead of charge off – which will provide you in a better position than the latter.