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Why Does My Credit Report Still Show a Charge Off on an Account?

Dear Experian,

I had a car payment that was seriously delinquent in 2015. In January of 2016 I brought the payment current, and the monthly payment has been paid in a timely manner since January of 2016 without delinquency. The account is in good standing. However, the creditor is reporting this account as a “charge off.” Can you explain? That doesn’t make any sense to me.

– KLN

Dear KLN,

A charge off status on an account is not removed when your payments become current, and will still remain on your credit report for seven years from the original delinquency date. When you are seriously delinquent on an account, the lender may write the account off as a loss to their business, which means the account would be reported as a “charge off.” In many cases, the lender will then sell the debt to a collection agency, and the subsequent collection account will then appear on your report.

In the case of a car loan, once the debt has been charged off, the lender may pursue repossession of the vehicle. Usually, the lender will send notice of serious delinquency and that your vehicle will be repossessed if you do not catch up on the payments. It sounds like you made arrangements with the creditor to bring your account current after the account was already in a “charge off” status, but before the account was sold to a collection company or the lender repossessed the car.

Because your credit report is a history of how you have made payments on your accounts, the account will show it had a status of charge off previously, but is now current.

Accounts that show a history of delinquencies are not listed in the “accounts in good standing” section of your credit report, even if they are now current and up-to-date. Because the account was previously delinquent, it will be listed under the “accounts that may be considered negative” section on your report.

How Long Will My Credit Report Show an Account That Was Charged Off?

Delinquencies remain on the credit report for seven years, so the account will show the late payment and charge off history for seven years from the original delinquency date. The original delinquency date is the date of the first missed payment that led up to the charge off status.

Once the seven year period is up, the negative information will be removed automatically. In the case of a car loan, the account will likely be paid in full and closed by then, so the entire account will fall off the report at that time.

The best thing you can do for your credit rating now is to keep making all your payments on time. The longer ago the delinquent or derogatory information occurred, the less it will negatively impact your credit scores.

Thanks for asking,
The “Ask Experian” Team

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