How Long Does a Charge Off Stay On Your Credit Report?

If you’re like most Americans, you know that maintaining a good credit score is essential to do things, such as buying a home or financing a car. That said, if you have failed to repay your debt, your debt may have been charged off. We often get asked how long does a charge off stay on your credit report? We will answer this question in much detail below.

How Long Does a Charge Off Stay On Your Credit Report?

A charge off will stay on your credit report for 7 years from the date that you first became delinquent on making your payment. After the 7 year period passes, the charge off will automatically be removed from your credit report. In the event that a charge off stay s longer than 7 years on your credit report, you can file a dispute with the credit bureau to have the charge off removed from your credit report.

For example, if you started missing payments on your credit card on January 1st, 2022 and your card issuer charge off the account on June 1st, 2022, the charge off will remain on your credit report until January 1st, 2029. On January 1st, 2029, the charge off will automatically be removed from your credit report.

A charge off is a serious negative mark that’s added to your credit report if you fail to repay your debt. A single charge off can lower your credit score by 100 or more points. So, if you have unpaid debt, it’s best that you contact your creditor and ask them about your options for repaying the debt to avoid a charge off.

If your debt was charged off by your creditor or lender, not only will a negative mark be added to your credit, a collection account may also be added to your credit report. This is so because when your debt is charged off, it may be sold to a collection agency. The collection agency will then attempt to collect the outstanding balance from you and in the process of doing so, they made a collection account to your credit report.

A single collection account can cause significant damage to your credit just as would a charge off.

If you’ve had a charge off and/or collection account added to your credit report, many lenders will be unwilling to work with you because you’ve demonstrated an inability to repay the money that you’ve borrowed.

That said, as the charge off ages, its impact on your credit score will lessen until it’s ultimately removed after 7 years.

What is a Charge Off?

A charge off is added to your credit report when a lender charges off (writes off) your debt, counting it as a loss and closing down your account. Usually, after a lender writes off your unpaid debt, it will proceed to selling the unpaid debt to a collection agency. The collection agency will then own the debt and will come after you in an attempt to collect the unpaid debt from you. In the process of attempting to collect the debt from you, the collection agency may add a collection account to your credit report.

Can You Remove a Charge Off From Your Credit Report?

We often get asked whether a charge off can be removed from your credit report? The truth is that a valid charge off cannot be removed from your credit report. You can only have a charge off that contains incorrect information to be removed from your credit report.

You can try disputing your charge off, however, if you file a dispute, the credit bureaus will conduct an investigation to determine the validity of the charge off. If the investigation reveals that the charge off is valid, it will remain on your credit report. However, if the credit bureau finds that it is invalid, then and only then will they remove it from your credit report.

How Many Points Can a Charge Off Lower Your Credit Score?

A single charge off can lower your credit score by 100 or more points. The number of points that your credit score will drop depends on a few things, such as your starting credit score and whether you have other negative items on your credit report.

Generally, the higher your credit score, the bigger the drop in your credit score will be. However, if you’re starting off with a low credit score, a charge off will have lesser of an impact on your credit score because other items are already bringing down your credit score.

Also, if a charge off was added to your credit report, it’s highly likely that late payment marks, such as 30 days, 60 days, 90 days, and 120 days late marks have been added to your credit reporting significantly lowering your credit score. So, a charge off is just the icing on the cake and will further lower your credit score.

Do You Have to Pay Back Money After a Charge Off?

Although you’re no longer liable for paying off the debt to the original lender if it has charged off your debt and sold it to a collection agency, you are liable to the collection agency for the outstanding amount due. So, if you have had a charge off added to your credit report, when the debt is sold to a collection agency, a collection account will be added to your report, as well, causing further damage to your credit.

Can a Lender Charge Off Your Account If You Have Been Making Payments on the Account?

If you have been making the minimum payment on your account, your account cannot be charged off. However, if you’re making payments that are less than the minimum amount due, your lender can charge off your account. Also, if you file for bankruptcy, your lender can charge off your account, causing significant damage to your credit.

Can You Remove a Charge Off From Your Credit Report?

Removing a valid item on your credit report is extremely difficult to do. However, if the charge off was incorrectly reported or contains incorrect information, you can file a dispute with the credit bureau to remove the charge off from your credit report. That said, if the charge off is valid, you will not be able to remove it and it will remain on your credit report for seven years from the date that you first became delinquent on your account.

That said, you should know that the biggest impact that a charge off will have on your credit is when it’s first added to your credit report. As the charge off ages, its impact on your credit score will lessen until the charge off is ultimately removed from your credit report.

Will Paying a Charge Off or Associated Collection Account Improve Your Credit Score?

Although paying off any amount of debt that you owe is a good thing as many lenders will be unwilling to lend you money until you’ve paid a charge off or collection account, so you will benefit from paying a charge off or collection account. That said, paying off a charged off amount or collection account will not improve your credit. An unpaid charge off or collection account is just as negative to your credit as is a paid charge off or collection account. The only way to improve your credit is to negotiate the removal of the charge off and collection account from your credit report in exchange for payment of the outstanding debt.

Credit Score Planet Frequently Asked Questions (FAQs)

1. Should you pay a charge off?

If you have a charge off, you should first contact your lender and ask them about settling the debt or for them to place you on a payment plan. Your best bet is to pay off the debt to avoid further damage to your credit.

2. Do charge offs go away after 7 years?

Yes, a charge off only remains on your credit report for 7 years from the date that you first missed a payment on your account, so yes a charge off will go away in 7 years.

3. How bad is a charge off for your credit?

A charge off is a significant negative mark that’s added to your credit report, as such, you should try to avoid them. A single charge off can lower your credit score by 100 or more points, so it’s best to avoid them.

4. Can a charge off be reversed?

If you negotiate the removal of a charge off with your lender it may be possible to remove it but you should be aware that lenders are very hesitant to remove such negative information from your credit report.