What Is A “Charge Off” On My Credit Report?

What Is A “Charge Off” On My Credit Report?

A “charge off” on your credit report means that the creditor wrote your account off as a loss for their own purposes. This does not mean that the debt is not valid or owed, but the creditor is no longer pursuing the debt. The creditor may continue to report the past due amount and the balance owed.

Unless requested, charge offs occur when a debt hasn’t been paid in six months, or 180 days. Creditors are not obligated to inform you that your account has been charged off, but they must tell the credit reporting agencies, like Experian.

What if I didn’t accumulate the debt?

Unfortunately, there are times when individuals don’t even realize that a credit card in their name has accumulated unpaid debt until collection efforts are made.  This is especially true in cases where they have been taken advantage of by a friend, family member, or even a third party scammer who has used their information and credit for their own benefit and stuck the victim with the bill.  If this has happened to you, call the Center for Elder Law and Justice at 716-853-3087 to speak with someone in our Elder Abuse Prevention team.

*NOTE: Scammers often impersonate collection agencies over the phone. If you receive a call from a debt collection agency, do not provide any sensitive information and ask for everything in writing. If the caller refuses or gets hostile, they may be a scammer.

How Long Does a Charge Off Remain on a Credit Report?

The charged off account will remain on your credit report for seven years from the original delinquency date of the account, or the first 30-day missed payment.

For example: if your account was reported as past due today, you never bring the account current or pay any more into the debt, and the account gets charged off, then the original delinquency date would be today and the account will be deleted from your credit history seven years from today.

Collection Agencies

Many creditors sell their charged off accounts to collection agencies for a tiny percentage of the debt’s value. In this case, the collection agency will report the debt once more. Should you elect to pay your debt, you will no longer be able to pay the original lender, who no longer owns the debt, but you must pay the collection agency instead.

How does a Charge Off impact my Credit Score

A credit score is a number assigned to a person that indicates to lenders their capacity to repay a loan. Payment history is the most important part of your credit score. Having any negative note in your credit report will impact your credit score, which will make it more difficult to be approved for loans or credit cards in the future.

If you choose to pay a debt that’s been charged off, and pay it in full, future creditors may be more inclined to loan to you. However, it is entirely up to the creditor.

What To Do If You Get Sued

Once a debt is charged off and sold to a debt collection agency, you may get a notice saying you are being sued for the debt.  You have a limited time to respond to this notice before it is considered a default, and if you do not respond with in that limited time frame a judgment may be then issued.  It is important if you receive any notice that you contact an attorney.