What are credit card charge offs? A charge off is a severe credit status a consumer can get on his credit report. It’s in lieu with bankruptcy and foreclosure but not as severe as the prior. Your accounts can only be inside the charge off status when you neglected to pay your bills on time.

Prior to accounts are declared charge offs, the credit providing provider will turn them over to the collection agencies. For those who fail to settle your accounts in the collections stage, they’ll be declared as charged offs by the creditors. Charge offs are treated as expenses by the creditors for the reason that of their inability to collect receivables from their clients.

Charge off status is activated at the end of the year, generally when the credit organizations file their yearly Profit and Loss Statement with the IRS. Even if your debt’s status has been changed as charged offs, that you are still necessary to pay your debt in full or a lawsuit might be filed against you.

One of the elements that negatively affects your credit score is the appearance of charge offs inside your credit report even if you totally settled your account with the provider. Due to the fact of the Fair Credit Reporting Act, charge offs will stay on your credit report for a maximum of seven years.

For those who locate an erroneous entry filed as charge off inside your credit report, you ought to file a complaint with the creditor concerned. If the creditor doesn’t cooperate, make sure you write a complaint letter to all the important credit reporting bureaus carefully outlining the charge off status of the account. The creditor is given 30 days to respond to the complaint and if they don’t respond inside the given timeframe, the charge off item might be removed from your credit report.

However, if the charge off in your credit report is legitimate, you can work directly with the original creditor and make a deal with them. You should avoid cutting deals with collection agencies because this will only lead to lawsuits filed against you. If the original creditor agrees to your terms, you may be required to make partial or full payment of your total debt before they revert back the charge off from your credit report.

By removing charge offs from your credit report, you are eliminating negative factors that directly affect your total credit score. Always remember, an unblemished credit report provides better credit standing for you.