In today’s busy world, it’s easy to forget to complete some ordinary tasks: brushing your teeth, getting gas or paying one of your bills on time. And that last one can be a killer, sinking your credit score and making it harder – and more expensive – to obtain credit – especially car loans and mortgages. In some cases, a creditor will “charge-off” your debt. This is Kryptonite to your credit score.
Now even though they’ve charged off your account, creditors can and will look to collect from you. The “charge-off” is essentially an accounting move for them. It’s far more real for you.
So, let’s look at some ways to recover from the dreaded “charge-off” (you’re on your own with the teeth and gas, sorry.)
- Review your credit report: It’s yours. Go look at it. Your creditors are! Determine how much of it is correct, how much is outdated; are there mistakes? You’ll also want to check for old charge-offs, or if it shows charge-offs that are not yours! This stuff happens. Frequently. Find out and then start to take action.
- Tackle that old charge-off: Charge-offs remain on your credit report for seven years and then should not appear anymore. But credit bureaus make mistakes, and old charge-offs may still show. Contact the credit bureau in question and make a formal dispute to have the item dropped from your report if it is greater than seven years old.
- Talk to a credit bureau: If you see a current charge-off on your account that is not yours, you need to dispute it with the credit bureau. You can do this if the charge-off is inaccurate or misleading as well. Talk to them! They want to get it right and so do you. Silence is not golden here.
- Talk to the creditor, not the collector: When it comes to how to remove charge-offs from your account, it is better to deal with the creditor who reported the charge-off than with a debt collector trying to collect it. A debt collector cannot change what the original creditor reported to any credit bureaus. They’re like talking to an ex-spouse.
- Request a status change: By talking with the creditor, you may be able to encourage them to remove the charge-off in exchange for a settlement. Make sure you speak to someone who is allowed to remove the charge-off from your account. If you are not comfortable negotiating over the phone, you can send a pay-for-delete letter, which asks the creditor to remove the account from your credit report in exchange for full payment. If the creditor won’t delete the charge-off, then request the less negative status of Closed. Make sure you get it in writing for proof.
- When to talk to the collection agency: If the collection company itself is showing as the “charge-off” on your credit report THEN speak to them (not the creditor) for relief. Paying off a collection debt won’t delete a charge-off from your credit report, but you can ask the agency to remove their collections record from your report as part of the negotiation for paying your debt. They don’t issue credit so their report of you is to get paid. Make that work for you.
You are not alone in this. Millions of people have faced the battle of “charged-off” debt. The ones that succeed take ownership of the problem and dive in with these six steps. They did it. You can too.
And, of course, remember to floss and that E doesn’t mean enough.