Sarah Edwards | November 23, 2022
Summary: While removing accurate charge-offs from your credit report may be challenging, it’s well worth the trouble. Doing so can vastly improve your credit score, making it easier for you to obtain future loans. Use the sample letter below to request a removal of a charge-off on your credit report.
If you’ve stopped paying your creditors for unpaid debts, they will likely report your account as a charge-off after four to six months of non-payment. Charge-offs reflect negatively on your credit report and may drop your credit score by 100 points or more.
A poor credit score impacts your ability to obtain a loan, buy a house, or even get a job. Creditors consider charge-offs one of the most severe offenses a consumer can incur, short of declaring bankruptcy. If you need a decent credit score and have a charge-off on your report, you’ll want to take steps to remove it.
While no one can promise you that your creditor will remove your charge-off, it doesn’t hurt to try. With the right plan and resources in place, you can increase your chances of removal. Let’s get started.
A charge-off occurs when you stop making payments to your creditor. A creditor will wait several months to see if you catch up on your obligations before reporting your account as a charge-off to the major credit reporting bureaus.
If a creditor decides to charge off your account, it doesn’t mean you no longer owe them any money (as lovely as that would be). Instead, it sends a signal to other creditors and financial entities that you didn’t pay your debt according to its payment terms.
Following a charge-off, you may continue to hear from your creditor. They may offer you new payment terms or allow you to settle the debt with a one-time payment. If you fail to respond to their communications, they may decide to file a lawsuit against you or sell your obligation to a debt collector.
Let’s take a look at an example.
Example: Selena falls behind on her credit card payments, and after several months of missed payments, the card company marks the account as a charge-off. Eventually, the account is sold to a debt collection agency who starts contacting Selena non-stop to get her to pay up. She uses SoloSuit to send a Debt Validation Letter, forcing the collection agency to validate everything surrounding the debt before they can continue collection efforts. If the agency doesn’t have all the proper documentation needed to validate the debt, there is a chance Selena will be off the hook, but the charge-off will continue to show on her credit report for at least seven years.
If you allow your creditor to charge off your debt, you’re likely struggling financially. You may be considering bankruptcy or debt settlement. Even if that’s the case, trying to remove the charge from your credit report is a good idea.
If a creditor decides to charge off your account, they’ll likely send you a letter or email. You’ve probably heard from them for several months, trying to collect on their debt or get you back on a monthly payment plan.
However, most creditors give up after six months of attempts. They’ll report your account as a charge-off and slow down their collection activity while they decide how to handle your non-payment.
To see if you have charge-offs on your credit report, obtain a copy of your report from each credit reporting bureau. You can do so by visiting Annual Credit Report, a government-authorized website that provides free credit reports to consumers.
Once you have copies of your credit reports from Experian, Transunion, and Equifax, review them very carefully. Note any errors and circle all charge-offs. Make a list of the creditors who charged off your accounts. You’ll want to contact each credit reporting bureau to dispute the charge-off.
There are two types of charge-offs: accurate and inaccurate charge-offs.
Accurate charge-offs occur between you and a creditor you have an obligation to. When you stop making payments to the creditor, they charge off your account and report it to the credit bureaus.
An inaccurate charge-off happens for specific reasons, like identity theft or creditor error. If you are the victim of identity theft, you’ll want to dispute the charge-off but also take steps to ensure criminals aren’t using your personal information for their own gain.
Even if your charge-off is accurate, you can still dispute it. You’ll want to write the credit reporting bureaus and tell them why they should remove it from your credit report. If you’ve paid your debt in full or settled it through an agreement, they may be able to remove the adverse charge-off.
Include your personal information and details concerning the charge-off in your letter. If you have evidence proving that the charge-off is inaccurate, you should provide it. Make sure to give the credit bureau clear information concerning your debt, including the creditor’s name and account number.
Most credit reporting agencies ask you to prove your identity in your letter. To do so, you’ll need a copy of a government-issued ID card, like your driver’s license or passport. You may also provide them with a copy of a recent bill, like a utility statement or bank statement.
Here is a standard template for requesting the removal of a charge-off from your credit report, and here's what it looks like:
You should send a letter to each credit reporting bureau that reports the charge-off you disagree with.
Each credit bureau follows a specific process for credit reporting disputes. They’ll review your letter and evidence. Next, they’ll contact your creditor and get their side of the story. The credit reporting bureau will decide on your dispute based on information from you and your creditor.
By law, credit reporting bureaus must finalize their investigation within 30 days. If they don’t feel they have enough information to make a decision, they may ask for more details.
If the credit reporting bureau finds the charge-off is legitimate, they’ll provide you with proof of their decision. If they can’t prove that the charge-off is accurate, they must delete it from your report.
You’ll have a stronger case for a charge-off removal if you provide them with clear-cut evidence, like a note from your creditor agreeing to delete the charge-off from your credit report in exchange for payment.
If a creditor charges off your account, it negatively impacts your credit score for the short term, usually several years. It will be difficult for you to obtain new credit during that time.
You can close the issue with your creditor by paying off your account or arranging for a settlement. They’ll no longer be able to pursue legal action against you, and the charge-off won’t have as much of an impact since you’ve settled the obligation.
If you ignore the charge-off, it isn’t going to disappear magically. Your creditors can still pursue you for payment, and they may take legal action against you. A lawsuit can enable them to garnish your wages or even seize your property.
Yes, it is possible to negotiate a charge-off removal with your creditor. If you’d like to remove your charge-off with the help of your creditor, ask them if they’d be willing to delete the charge-off in exchange for a payment of the obligation.
Remember that creditors are under no obligation to remove your charge-off, even if you make the payment to close the debt. They don’t have to accept your offer.
However, if you’re successful in your negotiation, make sure to get the agreement in writing. Ask the creditor to draft a letter indicating they will delete the charge-off with all three credit reporting bureaus in exchange for your payment. Once you receive the letter, keep a copy of it in case they don’t fulfill their end of the bargain.
If the creditor agrees to remove the charge-off, wait two months and pull your credit report from all three credit reporting bureaus. If the charge-off still appears on your report, file a dispute and include a copy of the letter from your creditor agreeing to delete the charge-off.
Keeping a close eye on your credit report is essential if you intend to be proactive about protecting your credit. Errors on credit reports can alert you of potential illegal activity like identity theft.
While removing accurate charge-offs from your credit report may be challenging, it’s well worth the trouble. Doing so can vastly improve your credit score, making it easier for you to obtain future loans. Make sure to follow our guide and take appropriate steps.
When your account is charged-off, there is a good chance it will be sent to collections. When debt collectors reach out to you about a debt, ignoring them can lead to a lawsuit.
If you’ve been sued for a debt, it’s important to respond to the lawsuit. Otherwise, you will lose automatically and risk having your wages garnished and your property taken.
Use SoloSuit to respond to your debt collection lawsuit in minutes and increase your chances of winning by 7x.
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You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
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Out Debt Validation Letter is the best way to respond to a collection letter. Many debt collectors will simply give up after receiving it.
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