Use these super easy strategies to remove charge offs from your credit report. If you’ve seen your credit score drop because of a charge off, you may be wondering if there’s anything you can do. A charge off can be a serious ding on your credit report and signal to future lenders that you might be a risky borrower. But you don’t necessarily have to live with the negative consequences of having one of your debts charged off. Want to learn how to remove charge offs from your credit report? We are going to review four easy steps to removing charge offs from your credit record.
What is a charge off?
Before we jump into how to remove a charge off yourself from your credit report, let’s go over what exactly is a charge off.
A charge off occurs when a lender decides that you probably won’t pay back the money that you owe, and sell your debt to a collection agency such as MRS Associates or Portfolio Recovery. This way the lender makes a few bucks off your debt. This is known as a charge off.
Lenders will generally charge off your debt when you haven’t made monthly payments for six consecutive months. But don’t be confused, you’re not off the hook for the debt. Even if it’s been charged off, you still owe the money and you’ll likely hear from the debt collector who purchased your debt.
How long does a charge off stay on your credit report?
A chargeoff is a big deal and can seriously affect your credit score. This happens for a couple of reasons:
- You’ll likely see your credit score drop because you’ve missed debt payments. As your balances become past due or delinquent, you’ll notice that reflected in your credit score.
- When the creditor decides to charge off your debt and reports that to credit bureaus, you may see your credit score decrease again.
Because a charge off can signal to a lender that you might have trouble paying back your loan, having this on your credit report could affect your chances of borrowing money in the future. Negative information, such as charge offs, will generally stay on your credit report for seven years.
Steps to remove a charge off
If you’re facing a charge off and you want to get it removed from your credit report, you’ll want to follow these steps:
Step 1: Obtain a copy of your three credit reports
You’re entitled to get a free credit report from each of the three big credit reporting agencies every 12 months. If you are lucky enough to live in the state of Georgia you can get 2 copies per year. You can get a copy of your credit report from AnnualCreditReport.com. If you’ve already requested your free copy and you want another copy within 12 months, you can be charged up to $12.50.
You may also want to check your credit score, which is different than your credit report. Your credit score takes the information on your credit report and applies a numeric score depicting your credit worthiness. A higher number means you have better credit and a lower number means you have worse credit. If you want to check your credit score, you can buy your FICO credit score using MyFico.com.
Step 2: Look for mistakes
Once you have your credit report, you’ll want to review it for errors. Look at all of your information and confirm everything is correct, including:
- Each of your debt balances is only listed once
- All of the accounts listed are actually yours
- All negatively reported accounts have the correct date of last payment or date of first delinquency
- That all of the outstanding debt balances are correct
- That none of the debt is past the statute of limitations for your state
If one of your accounts has gone into collection, you may find an error with that debt amount being listed multiple times with multiple creditors.
Step 3: Dispute Inaccuracies
If you find any mistakes on your credit report, you’ll want to dispute this directly with the credit reporting agency. You should send a letter to each of the credit reporting agencies that includes:
- Your contact information
- The mistake information, including the account number
- Why you believe the mistake is wrong
- Request for the mistake to be corrected or removed
You’ll want to send this letter via certified mail with a return receipt so you can have proof that your letter was actually received. You’ll also want to send a letter disputing the mistake to the furnisher, that is, the company that sent the information to the credit reporting bureau.
Quick tip: Regardless of if you are sure of an inaccuracy, you can always ask the credit bureau to verify any record which sometimes can result in it being deleted because it is unverifiable.
Step 4: Send a goodwill letter
If you don’t have luck with a dispute, you might be able to use a goodwill letter to remove a charge off from your credit report. This is a letter that you send to your creditor to ask them to remove the information from your record.
While they’re not legally required to do this, if you can explain your situation, you may have luck getting it removed. A goodwill letter is only applicable if you’ve paid the debt you owe – if you still owe money to the original creditor, a charge off won’t be removed with a goodwill letter.
Your credit score will increase significantly, even if you are only successful at removing one charge off from your credit record.
A word of Caution Disputing the Credit Bureaus
When our co-founder, Mark Huntley, disputed his Equifax report, they lowered his credit score by 72 points the next day! But the point is you may want a professional helping you and counseling you throughout the process. If the idea of disputing information with a creditor or the credit bureau is overwhelming, you don’t have to go through the process on your own. You may want to consider hiring a company like The Credit Pros. They can help you send letters to creditors to try and get negative information, like a charge off, removed from your credit report.