How to Remove a Charge-Off from Your Credit Report

A charge-off can be a frustrating entry to see appear on your credit report. It’s not just a financial setback. This type of negative credit item has the potential to impact your credit score for years—making it harder to qualify for loans, credit cards, and even affordable housing (like a mortgage or lease). Yet at the same time, a charge-off isn’t something you’re stuck with forever.

The guide below breaks down what a charge-off is and what it means for your credit score. You’ll also find helpful strategies that might help you either get a charge-off removed from your credit report or at least reduce its impact. Finally, we’ll show you actionable ways to build credit and tips for protecting your credit from future damage.

What is a charge-off on your credit report?

A charge-off doesn’t happen the first time you miss a payment on a credit obligation. But when you stop making payments on an account like a credit card, personal loan, car loan, or other type of debt, that’s where the path toward a charge-off begins. Eventually, after you miss enough payments, a creditor may give up on trying to collect your unpaid debt and mark it as a loss for accounting purposes. When this event happens, a charge-off occurs.

In general, charge-offs take place somewhere between 120-180 days of non-payment. Another way to look at the situation is that you’re usually at risk for a charge-off after you miss around four to six monthly payments in a row. However, exact timing can vary from one creditor to another.^[1]

Keep in mind that even after a creditor charges off your account, that doesn’t mean you no longer owe the debt. A charge-off isn’t the same as debt forgiveness. After a creditor charges off a debt, it can still try to collect the money you owe. Creditors may also sell or assign charged-off debt to third party debt collectors. If this happens, a collection account may show up on your credit report in addition to the charged-off account.^[2]

How does a charge-off impact your credit score?

A charge-off usually affects your credit score in a negative way. But it can be hard to predict the exact impact a charge-off will have because it doesn’t reduce your credit score by a certain number of points. (Credit scoring is a more complex process than that.) Instead, the credit score impact a charge-off has varies from one person to the next.

If your starting credit profile is strong (e.g., you have good credit), the addition of a new charge-off on your credit report could cause a significant credit score decline. But if you’re already struggling with a bad credit score, a new charge-off on a credit report that already has numerous other blemishes would probably have a less noticeable impact.^[3]

On a positive note, the longer a charge-off stays on your credit report, the less meaningful its credit score impact should be. So, even if you see a big credit score drop when a new charge-off first happens, that impact should lessen over time.^[4]

How long does a charge-off stay on your credit report?

A legitimate, accurate charge-off can remain on your credit report for up to seven years. The seven-year clock starts ticking on the date of the original delinquency on the account. At the end of this period, the credit bureau that placed the charge-off on your credit report should automatically remove it.

If your creditor sold the account to a debt collector, the collection account can also stay on your credit report for up to seven years (from the date of the first missed payment that lead to charge-off status or collection). So, you could wind up with two negative items on your credit report that stick around for as long as seven years.^[5]

It is, however, important to understand that credit reporting is voluntary.^[6] Creditors and collection agencies do not have to report any item to the credit bureaus—negative or positive. But many creditors do choose to report all of their consumer accounts (charge-offs or otherwise) to Equifax, TransUnion, and Experian.

Ways to remove a charge-off from your credit report

Because a charge-off has the potential to hurt your credit score for up to seven years, the desire to remove it from your credit report makes sense. Unfortunately, there is no guaranteed way to get a charged-off account off your credit report early—especially if the account is accurate.

Still, there are a few strategies that might be worth trying.

1. Dispute credit reporting errors

If the charge-off on your credit report is an error, you should be able to get it removed by disputing the mistake with the appropriate credit reporting agency—Equifax, TransUnion, or Experian. Thanks to the Fair Credit Reporting Act (FCRA), you have the right to dispute any inaccurate or outdated information that appears on your credit report, including charge-offs and other types of accounts. And when you send a dispute to a credit bureau, it must correct or delete inaccurate information from your credit file—typically within 30 days.^[7]

2. Negotiate a pay-for-delete agreement

Some creditors might be willing to remove a negative charge-off account (or at least the charge-off notation) from your credit report in exchange for payment or settlement of the past-due debt. This is called a pay-for-delete agreement. These types of deals aren’t common or guaranteed. In fact, they tend to be a bit of a long shot. But it doesn’t hurt to ask.

If you decide to try to negotiate a pay-for-delete arrangement, it’s usually helpful to save enough money for a lump-sum settlement offer first. You should also get any settlement offers in writing before you provide payment to any creditors. If a creditor doesn’t honor its agreement after you pay by asking the credit bureaus to delete or update the charge-off account, it’s important to have written proof to protect yourself.

3. Ask for a goodwill deletion

If you’ve already paid a charged-off debt but you didn’t negotiate a pay-for-delete agreement, consider asking the creditor for a goodwill deletion after the fact. A goodwill deletion is simply a request the creditor sends the credit bureaus asking for the early removal of a charge-off from your credit report—before the seven-year credit reporting period ends.

When you ask for a goodwill deletion, consider explaining why you fell behind on your payments in the first place. Be sure to mention if you were facing unusual financial hardships like an illness, job loss, or other financial challenges.

Of course, creditors are not under any obligation to honor goodwill deletion requests.

4. Settle or pay the account

Even if a pay-for-delete agreement isn’t possible, it’s typically smart to settle or pay legitimate charge-offs if you can afford to do so. Although settling or paying a charged-off account may not remove the item from your credit report, it may still benefit you in a few ways.

Potential credit benefits: Repaying or settling charge-offs might have a positive impact on your credit score (though there’s no guarantee).^[8] Sometimes a charge-off will show a past-due balance on your credit report. So, paying the account could trigger a credit score lift. Even if you don’t see positive credit score movement from a settlement, paid charge-offs typically look better than those with outstanding balances—especially in the eyes of future lenders.

Possible protection from lawsuits: Remember, even though an account is charged off, you’re still legally liable for legitimate debts that you promised to repay. Creditors and collection agencies could sue you and try to file a judgment against you for unpaid debts that fall within the statute of limitations for debt collection in your state.^[9]

5. Be patient

In some cases, you might not be successful in your attempts to resolve a charge-off using the strategies above. And although that can be discouraging, it doesn’t mean you’re stuck dealing with a negative account forever.

From a credit standpoint, the credit bureaus should delete charge-offs from your credit reports after seven years. If an outdated charge-off remains on your credit report past the cut-off date, you can dispute it.

How to avoid future charge-offs

If you’ve ever dealt with a charge-off, you know how much of a hassle this type of credit damage can cause. So, it’s in your best financial interest to try to avoid these negative accounts in the first place.

Here are a few tips that could help you protect your credit and hopefully steer clear of charge-offs in the future.

• Pay your bills on time. Set up calendar reminders and autopay to help avoid accidental late payments. Missing a due date could trigger negative consequences like late payment fees, penalty interest APRs, negative credit reporting, and more.
• Create a budget. Make or update a budget that’s realistic for your current financial situation. Consider your current income and expenses. If your bills and variable spending are higher than your income, look for opportunities to cut expenses and increase earnings (perhaps with a passive income stream).
• Build an emergency fund. As soon as your financial situation allows you to do so, it’s wise to start building an emergency fund. Even if you can only save a little money at a time toward this goal, an emergency savings account can be a great safety net to help you try to keep your bills on time should you experience any financial hardships down the road.
• Communicate with creditors. If you’re struggling financially, reach out to creditors before you fall behind on your bills. Some creditors may offer hardship programs with temporary payment pauses or loan modifications that could bring you some short-term financial relief. You won’t know what’s available unless you ask.
• Pay down debt. Paying down debt (especially high-interest debt) can be another smart move once your financial situation improves. By reducing your debt, you’ll have more money to save for the future and apply toward other priority areas of your budget.
• Monitor your credit. It’s important to keep a close eye on all three of your credit reports. You can access free copies of your credit reports each week at AnnualCreditReport.com. If a mistaken or fraudulent charge-off winds up on your credit file without your knowledge, regular credit monitoring can help you detect the problem early so you can dispute the error and try to get the issue corrected.

Strategies to build credit after a charge-off

A charge-off can be a big setback—both financially and for your credit score. But it’s not a problem you can’t overcome. The steps below can help you build good credit, even after a charge-off, so you can move forward with your life.

• Pay future bills on time. Whether it’s a student loan, a credit card, or some other credit obligation, it’s important to pay every bill on time. Payment history influences your credit score more than any other factor—worth 35% of your FICO® Score^[10] and 41% of your VantageScore 4.0.^[11]
• Consider opening new credit. Establishing new accounts won’t erase negative history from your credit report. But it could give you a chance to establish positive payment history for the future. Keep in mind that if you have bad credit or no credit, you may need to focus on accounts you’re more likely to qualify for, like credit builder loans or secured credit cards. With other types of financing, like premium rewards credit cards and certain loans, you may need good credit to satisfy eligibility requirements.
• Add rent payments to your credit reports. Rent payments don’t typically appear on credit reports. But you can use services like Self’s free rent reporting to share on-time rent payments with all three credit bureaus at no charge. There’s also an option to report up to two years of past payment history (rent, cell phone, and utilities) for a one-time fee of $49.95.^[12]
• Become an authorized user. Consider asking a trusted family member or friend to add you to a well-managed credit card account. Being an authorized user on this type of account could potentially be a helpful credit-building opportunity. But be aware, if the primary cardholder doesn’t manage the card responsibly (e.g., they make late payments or have a high credit utilization ratio on the account), there’s a chance that being an authorized user could hurt your credit score instead of helping it.^[13]
• Limit new credit applications. Adding too many hard inquiries to your credit report in a short period of time can be bad for your credit score. Likewise, the addition of new credit accounts can cause your average age of credit to decline—another factor which may trigger a temporary credit score drop. So, it’s important to be cautious and purposeful about any new credit applications you choose to pursue.
• Don’t close old accounts. Length of credit history is worth 15% of your FICO Score.^[14] The older the accounts are that appear on your credit report, the better from a credit scoring standpoint. Closing accounts won’t cause an immediate reduction in your average age of credit. But it could eventually lead to problems once the account comes off your credit report (about 10 years after account closure for positive accounts). Also, if you close an old (paid) credit card account, it may cause your credit utilization ratio to increase which could be bad for your credit score.^[15]

It’s important to be patient as you work to build credit because meaningful changes don’t happen overnight. But if you’re consistent, small and steady steps can add up over time.

Bottom line

When a charge-off happens, it’s normal to feel overwhelmed and frustrated. But remember to take a deep breath and know that this type of credit issue doesn’t have to define your financial future. Even in this stressful situation, you have options.

In some situations, you might be able to remove a charge-off from your credit reports—especially if there’s evidence of an error or fraud. However, if you’re unable to remove a charge-off from your credit report early, the negative item will still come off eventually after seven years. In the meantime, you can work to address any current financial issues, build new credit, and establish good financial and credit habits for the future.

Sources

1. Experian.com. “What Is a Charge-Off?” https://www.experian.com/blogs/ask-experian/what-is-a-charge-off/
2. Equifax.com. “What is a Charge-Off?” https://www.equifax.com/personal/education/credit/report/articles/-/learn/charge-offs-faq/
3. myFICO.com. “How Credit Actions Impact FICO® Scores.” https://www.myfico.com/credit-education/faq/affects-of-credit-actions
4. Experian.com. “How Long Can Negative Items Stay on Your Credit Report?” https://www.experian.com/blogs/ask-experian/how-long-can-negative-items-stay-on-your-credit-report/
5. Equifax.com. “How Long Does Information Stay on My Equifax Credit Report?” https://www.equifax.com/personal/education/credit/report/articles/-/learn/how-long-does-information-stay-on-credit-report/
6. ConsumerFinance.gov. “How do credit reporting companies get my information?” https://www.consumerfinance.gov/ask-cfpb/how-do-credit-reporting-companies-get-my-information-en-1263/
7. ConsumerFinance.gov. “A Summary of Your Rights Under the Fair Credit Reporting Act.” https://files.consumerfinance.gov/f/201504_cfpb_summary_your-rights-under-fcra.pdf
8. Experian.com. “Paying off Closed or Charged off Accounts.” https://www.experian.com/blogs/ask-experian/paying-off-closed-or-charged-off-accounts/
9. AFMorganLaw.com. “Charged-Off Debt: What It Really Means and Why You Still Owe It.” https://afmorganlaw.com/charged-off-debt/#:~:text=YES
10. myFICO.com. “What’s In My FICO® Scores?” https://www.myfico.com/credit-education/whats-in-your-credit-score
11. VantageScore.com. “The Complete Guide to Your VantageScore.” https://vantagescore.com/resources/knowledge-center/the-complete-guide-to-your-vantagescore
12. Learn.Self.inc. “Raise your credit like your landlord raises rent.” https://learn.self.inc/lpg/mpa/rent-bills-landing/?_gl=1*eouzv2*_gcl_aw*R0NMLjE3NDc0NTk2NjAuQ2owS0NRandsWUhCQmhEOUFSSXNBTFJ1MDlwQzI4N1dYY3FIUTRJcVF2bkp6LWlEb0ZtSHZkQ3dlZ3JZRFVvWUM0YVB0T2hpRUVzcWNHb2FBdEl2RUFMd193Y0I.*_gcl_au*ODMwMjA0MjY2LjE3NDUzNzcyOTY
13. Experian.com. “Will Being an Authorized User Help My Credit?” https://www.experian.com/blogs/ask-experian/will-being-an-authorized-user-help-my-credit/
14. myFICO.com. “What Is the Length of Your Credit History?” https://www.myfico.com/credit-education/credit-scores/length-of-credit-history
15. Experian.com. “When Are Closed Accounts Deleted?” https://www.experian.com/blogs/ask-experian/when-are-closed-accounts-deleted/

About the author

Michelle Lambright Black is a nationally recognized credit expert with two decades of experience. She is the founder of CreditWriter.com, an online credit education resource and community that helps busy moms learn how to build good credit and a strong financial plan that they can leverage to their advantage. Michelle's work has been published thousands of times by FICO, Experian, Forbes, Bankrate, MarketWatch, Parents, U.S. News & World Report, and many other outlets. You can connect with Michelle on Twitter (@MichelleLBlack) and Instagram (@CreditWriter).

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