You Can Get Charge-Offs Removed from Your Credit Report, But It Ain't Easy

Imagine if you took a test, and then your grade on that test followed you around for years.  You’re applying for an apartment, and your landlord looks at your grade. You almost have that great job offer in hand, but first, your new boss has to check your results. Before you can get approved for a mortgage the bank needs to double-check that you didn’t flunk.

Have you imagined all that? Great. Well, it turns out that you don’t need to imagine anything. That test is called your credit report, and the grade for how well you performed on it is your credit score. In addition to being used on job and rental applications, the information contained on your credit report determines whether you can borrow money and the rates you’ll pay to do so.

One of the worst marks you can receive on your credit report is a charge-off. It shows that you have had trouble paying back your debts, and it will lower your score for years to come.

What is a charge-off?

A charge-off is what happens when you don’t pay back a debt that you owe. It could be on a loan or a credit card, but it could also be a utility bill. When a lender charges off a debt, they are writing it off as a loss. Sometimes they will try to collect on it themselves, but they may also refer it to a debt collector. Your creditor then reports the charge-off to the credit bureaus.

The length of time between when a payment for a debt is first due and when they charge-off the account will vary based on the lender, but is typically between 90 and 180 days. If you are able to make payments and catch up during that time, they will likely report the late payment, which will negatively affect your credit score but not as much as a charge-off. You can avoid having the account charged off if you pay before they cancel your account. For specifics on how your account works, please contact your lender.

One thing that needs to be made clear regarding charge-offs: even though the account has been charged off, you still owe that money. The creditor or the debt collector will contact you for payment. In some situations, they may settle for less than the original amount, but they may take you to court and garnish your wages to get what they are owed.

How can an accurate charge-off be removed?

Once a charge-off is on your credit report, it will remain there for seven years, although some information, like bankruptcies, will remain on your report for longer. As time passes, the charge-off will affect your score less and less, but the damage will linger.

If the charge-off is legitimate, meaning that you didn’t pay back the debt, then removing the charge-off from your credit report will be exceedingly difficult. You can’t simply ask nicely that the credit bureau remove it. After all, the charge-off is an accurate reflection of your credit history. That would be like asking your teacher to change a wrong answer on a test just to be nice.

What you can do is contact your original creditor. You can ask them—very politely—what it would take to have the charge-off removed. At the very least, they’ll likely ask you to pay back a portion of what you owe.

In this situation, some creditors may offer a “Pay for Delete” agreement. Bear in mind that some, but not all, creditors allow this type of agreement. If they do, you will pay off a certain percentage of your debt in return for the creditor updating your information with the credit bureaus and having the charge-off removed.

This is much more likely to work when you are dealing with your original creditor than it is with a debt collector. It was the original creditor that made the report to the credit bureaus, so they are the only ones who can have it removed. And let's be clear: The odds of having your charge-off removed from your report entirely are not in your favor.

We'd say that it doesn’t hurt to try, but entering a Pay for Delete agreement could violate your creditor's contract with the credit bureau, so there are certainly risks. Just make sure that you retain your composure and remain polite during the negotiations. The odds are already long, but a bad attitude can make them much longer.

Disclaimer: OppLoans as a company does not participate in this practice (Pay for Delete). For more information on how OppLoans handles charge-offs, please visit our FAQs.

If the charge-off is an error, here’s what you do.

Everybody makes mistakes, even the credit bureaus. After all, they are maintaining credit reports on practically every adult in the United States. Incorrect information is bound to slip through, especially when two people with the same name or share a current or former address. Incorrect information can also end on your report due to identity theft, but that is a much thornier issue.

If there is an incorrect charge-off on your credit report, you’ll need to contact the credit bureau directly and do so in writing. You can send them a “dispute” letter that outlines who you are, what information you would like to have removed, and why the information in question is incorrect. A good rule with dispute letters is to make it as easy as possible for the recipient to understand why the info is wrong. To that end, include as much documentation as possible.

If you’re wondering how exactly to write a dispute letter, check out this sample letter from the FTC.

Don’t trust folks who say they can remove legitimate charge-offs.

Credit repair agencies are companies that promise to help you repair your credit. While some companies are legitimate, there are numerous scammers who make big promises about instant results that they have no intention of keeping.

One of the biggest red flags that you can find with a credit repair company is when they tell you that they can have truthful information like charge-offs removed from a credit report. The odds of getting a Pay for Delete agreement in place are incredibly slim. Any company that makes promises like that is taking you for a ride. It is advisable to do your research before committing to any credit repair agencies.