Handling Charge Offs on Your Credit Report

Once a charge-off appears on your credit report, the original creditor has essentially written off the loan as a loss, therefore it is not surprising that many people do not exactly know what to do with a charge-off once they see it on their credit report. Should they attempt to repay their obligation or not?

With a charge-off the lender has determined that they will not be able to collect and rather than leave the bad debt on their books, they will write it off as a loss. Occasionally they will refer the loan to a collection agency. This can often be the cause of duplicate account listings on a credit report. There may be listings from both the original creditor and the collection agency on your credit report, when actually there is still just one account.

Negative credit, including charge-offs can stay on your credit report for 7 years, however, it is important to note that all credit reporting is based upon the date of the last activity on the account. Therefore if you pay off an old charge-off the 7 years will begin anew. So it is important to consider which would be less damaging, to pay off an old charge-off bringing forward the negative credit or just allowing it to come off or be removed in its own due time. If you are building good credit and the charge-off is in the past it may very well be more beneficial to let it be.

No matter what before you ever pay off any old debt, be it a charge-off or anything else, make sure that you receive an agreement in writing from the original lender and any collection agencies that states clearly that once the debt is paid off they will delete it from your credit report. This is called a "Pay for Delete" and it is the only effective way to pay off an old debt.

Regardless of the circumstances, the Fair Credit Reporting Act or the FCRA has given you the right at a consumer to dispute information found on your credit report. You can dispute anything that shows as derogatory credit including charge-offs, collection accounts, tax liens, judgments, repossessions, bankruptcies or foreclosures. You will need to write a letter of dispute, the credit bureaus then have a certain amount of time to validate their information or it must be removed.

As you are writing dispute letters and corresponding with the credit bureaus it is imperative that you keep meticulous records. Keep a copy of all correspondence from you and to you. Also make sure to keep track of the dates. The credit bureaus will have 30 to 45 days from receipt (send it certified mail so you know the exact date) to verify their information and then an additional 5 days to respond back to you. Make sure you follow up with them in a timely manner. Also you may need to be persistent and try again if you are not successful at the beginning.

You can conduct your credit repair on your own or you can hire a professional to help you. It can be very time-consuming and you often must be persistent and keep trying and following through. One of the biggest advantages to hiring a professional is that they can save you a great deal of time and energy, not to mention that they also have the experience and expertise to complete the repairs. It is not necessary to employ a professional assistance but you may decide that your own time is more valuable, to focus on your own work and life, especially if you would like to complete your credit repair in a timely manner.

It is possible to get charge-offs and other derogatory credit removed from your report. You just need to take some simple steps for credit repair. At the same time you will need to rebuild new credit that is good so that it can overcome the derogatory credit.

Source by Kevin Lynch

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