How to Remove a Charge-Off From Your Credit Report

What Is a Charge-Off?

A charge-off occurs when a creditor writes off your debt as a loss after you've failed to make payments for an extended period—typically 120 to 180 days, depending on the type of account. When a creditor charges off your account, they're essentially declaring that they no longer expect to collect the full amount you owe.

However, a charge-off doesn't mean the debt disappears. You still owe the money, and the creditor can continue collection efforts or sell the debt to a collection agency. The charge-off will also appear on your credit report, potentially damaging your credit score and making it harder to qualify for loans, credit cards or favorable interest rates.

How Long Do Charge-Offs Stay on Credit Reports?

Charge-offs remain on your credit report for seven years from the date of first delinquency, which is the date you first missed a payment that led to the charge-off.

It's important to understand that paying off a charged-off account doesn't remove it from your credit report or reset the clock. The account will still be listed as a charge-off and stay on your credit reports for the full seven years, though the status may update to show it's been paid.

Do Charge-Offs Hurt Your Credit Score?

Payment history is the most important factor in credit scoring models, and a charge-off signals to lenders that you failed to meet your financial obligations on a credit account.

As a result, the impact on your credit score can be substantial, though the exact point drop varies depending on your overall credit profile and the specifics of your account and credit profile. Additionally, the missed payments leading up to the charge-off can also harm your score.

Paying off a charged-off account won't help your credit score, at least not right away. However, it can show future lenders that you're committed to making good on your financial obligations, even after setbacks.

How to Try to Remove a Charge-Off From Your Credit Report

Removing a charge-off from your credit report can be difficult—and may not be possible in many cases—but there are legitimate strategies you can try.

1. Dispute Any Inaccuracies

Review your credit reports from all three major credit bureaus (Experian, TransUnion and Equifax) to check if the charge-off information is accurate.

Start by registering with Experian to get free access to your Experian credit report and FICO^® Score^Θ. You can also obtain reports from all three agencies through AnnualCreditReport.com.

If you find inaccuracies, you have the right to file a dispute with the credit bureau reporting the error. You can dispute online, by mail or by phone. The credit bureau must investigate your dispute, typically within 30 days, and remove or correct any inaccurate information.

Read more: Is AnnualCreditReport.com Safe?

2. Negotiate With the Lender

If you've already paid the charge-off and have otherwise maintained good credit habits, you can write a letter to the creditor asking them to remove the charge-off as a courtesy. This is called a goodwill deletion. Explain any extenuating circumstances that led to the charge-off, emphasize your improved financial situation and highlight your positive payment history since then.

Keep in mind that goodwill deletions are entirely at the creditor's discretion, and there's no guarantee of success. Still, it costs nothing to ask.

3. Wait for It to Fall Off

If other methods don't work, your final option is simply to wait. The charge-off will automatically be removed from your credit report seven years from the date of first delinquency.

During this time, focus on building positive credit habits to minimize the charge-off's impact on your credit score.

Read more: How Long Does It Take for Information to Come Off Your Credit Reports?

How to Improve Your Credit Score After a Charge-Off

While a charge-off remains on your credit reports for seven years, its impact diminishes over time, especially if you work diligently to rebuild your credit. Here are some steps you can take:

• Pay all your bills on time. Consistently paying all your bills by their due dates demonstrates financial responsibility and can help offset the negative impact of the charge-off over time.
• Keep your credit utilization low. Credit utilization refers to how much of your available credit you're using. Aim to keep your revolving credit balances below 30% of your credit limits, and ideally below 10%. Lower utilization shows lenders you're not overly reliant on credit.
• Avoid opening too many new accounts. Each credit application typically results in a hard inquiry on your credit report, which can temporarily lower your score by a few points. Opening multiple accounts in a short period can also make you appear risky to lenders, so only apply for new credit when necessary.
• Consider a secured credit card. If you're having trouble qualifying for traditional credit cards, a secured card can help you rebuild credit. These cards require a cash deposit that typically serves as your credit limit, but they may report to the credit bureaus just like regular credit cards.
• Keep old accounts open. The length of your credit history affects your credit score, so keeping older accounts open can be beneficial, even if you don't use them much. This strategy helps maintain a longer average account age.
• Continually monitor your credit. Check your credit reports and scores regularly to track your progress and catch any errors or signs of identity theft. You can access your Experian credit report for free, which allows you to stay informed about your credit status.

Take Control of Your Credit

A charge-off can be a major setback for your credit, but it doesn't have to define your financial future. By disputing errors, potentially requesting a goodwill deletion and focusing on positive credit habits, you can work toward improving your credit score even with a charge-off on your report.

Remember that rebuilding credit takes time and patience. As the charge-off ages and you establish a pattern of responsible credit use, its impact on your credit score will gradually diminish. You can monitor your progress with Experian's free credit monitoring tool.