Most people do not have any idea what to do about charge-offs when they show up on their credit report. A charge-off is an indication that the original creditor has written the loan off as a loss, therefore they are no longer actively trying to collect on the loan. However, it still shows on your credit report and it is not a surprise that most people do not know what to do about a charge-off. Should they pay off their obligation or should they leave it alone?
A creditor will write off the loan as a loss if they are unable to collect within a certain period of time. It is more beneficial for them to write it off as a loss if they do not believe that they will ever be able to collect it. Many times they do refer it to a collection agency however, and this can sometimes lead to duplicate listings on your credit report because the original creditor and the collection agency are both reporting to the credit bureaus even though there is just one account.
A negative credit listing, such as a charge-off is supposed to stay on your credit report for a period of 7 years, however that is 7 years from the date of the last activity on the account. So if you pay off an old charge-off to remove it from your credit report, it only serves to bring the negative credit forward as the 7-year time period starts anew. So it may be more detrimental to you to pay if off than it is to leave it alone since the bad credit will be brought forward. This is especially true when you have good new credit that you have been working on.
No matter what the situation may be, before you ever pay off any type of older debt, such as a charge-off or a collection account you need to make sure that you get an agreement in writing that once the debt is paid off they will delete it from your credit report. This process is referred to as a “Pay for Delete” and it is really the only way to protect yourself from further bad credit being reported on your credit report about that account.
You have the right to dispute any negative credit on your credit report under the Fair Credit Reporting Act or the FCRA. That includes charge-offs, collection accounts, repossessions, tax liens and even foreclosures and bankruptcies. The credit bureaus have a certain period of time after receipt of a letter of dispute to either verify the truthfulness of their negative reporting or delete it completely from your report.
Once you start sending in your dispute letters to repair your credit, it is crucial that you keep meticulous records. Make sure and keep a copy of every letter that you send and also every letter that you receive in return. The credit bureaus will have 30 to 45 days to verify the negative listings and then an additional 5 days to respond back to you. It is your responsibility to follow up with them and make sure that everything is completed in a timely manner. You must also realize that it may take more than one letter to get results so you will need to make sure that you are persistent.
Credit repair can be completed on your own and you do not necessarily need the assistance of anyone else, however it can be a complicated and time-consuming process and you may decide that you would prefer to use the services of a professional. It may very well be more cost-effective to do so when you take into consideration the time and expertise that it takes. Most people already have full-time jobs and full-lives and it may be better to delegate some of the work so that it can be completed in a timely and efficient manner with less interruption to your own life.
It is completely possible to get any type of negative credit listings removed from your credit report, including charge-offs, collection accounts and even bankruptcies and foreclosures. There are some simple and specific steps to take to get started. At the same time you will also need to start rebuilding good credit as you go so that it can overcome the bad credit of the past.
Related posts:
- What You Can Do About Credit Report Charge-offs Creditors often see charge-offs as an indication that a consumer...
- Remove Charge Offs There is a great deal of confusion among consumers about...
- Can You Remove Foreclosures From Credit Reports? The word foreclosure has become an ordinary term that a...
- The Best Way To Deal With Trying To Remove Judgments From Credit There aren’t many ways to remove judgments from credit. Avoiding...
- These Steps Will Help You Remove Collections From Credit You want to remove collections from credit because it obviously...
