What Does “Charge off” Mean on a Credit Report

Pensive man at laptop in home office

Dear Experian,

What is a "charge off," and what does it mean?


Dear TPA,

"Charge off" means that the credit grantor wrote your account off of their receivables as a loss, and it is closed to future charges. When an account displays a status of "charge off," it means the account is closed to future use, although the debt is still owed.

The credit grantor may continue to report the past due amount and the balance owed. If you pay the account, the status will reflect as a "paid charge-off."

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

The charged off account will remain on the credit report for seven years from the original delinquency date of the account, which is the date of the first missed payment that led to the charged-off status.

Charged Off Accounts May Be Sold to a Collection Agency

Most lenders sell their charged off accounts to a collection agency for a percentage of the account's value. In that case, a new account will be reported from the collection agency that owns the debt.

You can no longer pay the original lender, which is no longer associated with the account, but must deal with the collection agency. Again, if you pay the debt, the status will be updated to "paid collection."

Both the charged off account and the collection account will be deleted at the same time based on the original delinquency date of the debt.

Thanks for asking.
Jennifer White, Consumer Education Specialist