Summary: This article will go over in detail how to remove a charge-off from your credit report without paying.
You may have recently been contacted by a debt collector, or noticed a “charged off account” on your credit report. A charge off will likely have a very negative impact on your credit score.
Therefore, it’s a good idea to take the necessary steps to remove a charge off from you credit reports. In fact, depending on the circumstances, you may even be able to remove the charged off account without paying the actual debt.
Let’s get into how to deal with a charge off on your credit report.
- What Is A Charge-Off?
- How To Remove A Charge-Off From Your Credit Report
- How Long Does It Take For A Charge-Off To Be Removed?
- How Long Does A Charge-Off Stay On Your Credit Report?
- How Many Points Does A Charge-Off Drop Your Credit Score?
- Is A Charge-Off Worse Than A Collection?
- Will A Charge-Off Affect Buying A House?
- Bottom Line
What Is A Charge-Off?
A charge-off occurs when a creditor, such as a credit card company, has attempted to collect on a debt or late payment, and has been unable to recover the amount owed.
The creditor then marks the account as a charged off account. This allows the creditor to claim it as a business loss for taxes reasons.
Generally, the creditor will attempt to collect on the debt for several months before marking the account as a charge-off. Charge-offs usually occur with credit card accounts, but can also happen with other debts.
A charge-off also looks very bad on your credit report, will affect your credit score dramatically, and ultimately hinder your ability to get a loan in the future.
How To Remove A Charge-Off From Your Credit Report
There are four primary techniques you have use in order to remove a charge-off from your credit report.
These four techniques can be divided into two categories: do-it-yourself credit repair, or hiring a professional credit repair company.
Which one you choose is up to you. It really boils down to how quickly you want the charge-off removed, and how much work you are willing to put into it. If you’re the type of person who doesn’t really want to deal with debt collectors, hiring a professional is probably your best bet.
However, if you don’t might putting some time and effort into removing the charge off, it’s totally possible to do it yourself.
Let’s take a look at each of these four methods for removing charge-offs in greater detail.
1. Write A Debt Validation Letter
A debt validation letter is basically a letter that you write to your creditor, asking them to verify the details of the debt that they believe you owe them. The creditor then has to write back to you and confirm the details of the debt.
If the creditor cannot provide verification details of the debt, then the charge-off entry on your credit report has to be removed.
It’s important to know that you only have 30 days from the time they first contact in order to write this letter. If it’s been past 30 days, they have no obligation to validate the debt.
2. Hire A Professional To Remove The Charge Off
Although you can get a charge-off removed yourself, it’s a better idea to hire a credit repair company to do it for you. Credit report companies hire credit experts whose job is to get charge-offs removed from credit reports.
Credit repair companies specialize in getting negative items like charge-offs removed from your credit report. Credit repair companies will initiate disputes on your behalf with the three credit bureaus.
The Fair Credit Reporting Act states that a person can initiate a dispute regarding any incorrect entries in your credit report, including incorrect charge-offs. So, if the charge-off or any details of the charge-off entry are incorrect, then the company can send a dispute letter to the credit bureaus and request that the charge-off be removed from your credit report.
If you’re the type of person who would rather have a professional handle it and just be done with the whole thing, I suggest you check out Lexington Law Credit Repair.
They’ll take care of you, and honestly they usually get your collection account removed quicker than if you try to do it yourself. Give them a call at 1-844-331-6062 or Check out our review of their service.
3. Write An Advanced Dispute Letter
Writing an advanced dispute letter is a method of disputing the charge-off as inaccurate by looking very closely at the entry on your credit reports, and find any incorrect information.
First, you’ll need to get your hands on your credit report. You can get a copy of your free credit report here.
Once you receive your credit report, find the charge-off entry on the report and look at the details of the entry. You should find a number of details on the entry, including your name, dates of payments made, and your account number.
If any of these details have an error in them, then you can dispute the charge-off entry with the credit bureaus. You need to write a letter to the credit bureaus and mention the wrong charge-off entry.
The credit bureaus then have to provide verification for the entry. If they can’t verify the charge-off entry, then they have to remove it from your credit report or correct the entry.
Here are a few credit history details that you can further verify:
- Days late
4. Negotiate A Pay-For-Delete
If the details of the charge-off entry are all correct, then you might have to pay a small portion of the debt at least to get the charge-off removed from the credit reporting agencies.
You can negotiate with the creditor and come to a “pay for delete” arrangement. What happens in a “pay for delete” deal is that the creditor agrees to get the charge-off removed from your credit report in exchange for a certain sum of money that is less than the total debt amount.
When the debt is quite old, it’s easier to negotiate to pay less than the full amount of the debt. However, when the debt is newer, more than likely the debt collector will ask for the full amount. Either way, it’s a good idea to try and negotiate to pay less than the full amount.
When you employ this technique, make sure you get everything in writing. This can be in the form of an email or letter.
How Long Does It Take For A Charge-Off To Be Removed?
Working with debt collectors can be a very difficult and time-consuming process. Therefore, when you go about the process of removing a charge-off yourself, it can take several months.
The reason why it takes so long is because it’s recommended that you communicate via snail mail with a collection agency. The negotiation process itself can take several rounds of letters.
However, and we’ll get into this later, if you negotiate over the phone, you don’t have a paper trail and the last person you can trust is a debt collector.
One way you can speed up this process is by hiring a credit repair company. This is usually your best option if you’re trying to get a mortgage in the near future because it will move the process along much quicker.
How Long Does A Charge-Off Stay On Your Credit Report?
A charge-off can remain on your credit reports for up to seven years. Once seven years have elapsed from the date of the charge-off, the charge-off is automatically removed from your credit report.
So, if you didn’t make payments on a credit card for six months and you got a charge-off on May 1, 2020, then the charge-off will stay on your credit report until May 1, 2027.
One point to keep in mind is that the older the charge-off, the less of an affect it has on your credit score. Nonetheless, no matter how old the charge-off is, it’s going to look bad to future lenders, mortgage lenders, and affect your ability to get an auto loan.
How Many Points Does A Charge-Off Drop Your Credit Score?
A charge-off has a large negative impact on your credit scores. The exact number of points that you lose from your credit score depends on what your credit score was before the charge-off and the nature of your credit history until that point.
As an estimate, you could lose around 60 to 150 points from your credit score because of a single charge-off.
When you consider that a credit score lies between 300 and 850 points, you can see that charge-offs can have a massive impact on your credit score.
Paid Charge-off Vs. Unpaid Charge-off
Another consideration to keep in mind is that even if you pay the charge-off in full, it’s still going to have a negative impact on your credit history.
If a debt collector tells you that your score will increase by paying off the charge-off, don’t believe it. A paid charge off is just as bad as an unpaid charge off as it pertains to your credit scores.
The only advantage of a paid charge off, aside from not owing the debt, is that potential lenders will likely feel more confident lending to you, but I wouldn’t count on it. Again, you should really put forth the effect to remove the charge-offs from your credit report so you don’t have to deal with any of this.
Is A Charge-Off Worse Than A Collection?
Charge-offs are generally considered worse than collections because it’s much harder to get charge-offs removed from your credit report than collections. With charge-offs, you have lesser negotiating power with the creditor than you do with collections.
In addition, charge offs typically have a bigger impact on your credit score than collections. Again, this depends on your overall credit history.
Will A Charge-Off Affect Buying A House?
If you intend to take a loan to buy a house or take out a mortgage, then the charge-off will definitely affect buying a house.
Charge-offs have a huge negative impact on your credit score, so you are less likely to be approved for the loan or mortgage that you intend to use to buy the house.
If you do get approved for the loan, then you will have to pay a higher interest than normal because of your bad credit score.
Charge-offs can reduce your credit score significantly, which makes it hard for you to get loans, car leases, mortgages, and insurance at good rates.
It’s a good idea to get the charge-off removed from your credit report if you can so that your credit score can go back to normal.
In this article, I have told you how you can get a charge-off removed without paying anything or how you can get the charge-off removed by paying a small percentage of the debt.