What is a “charge off”?
“Charge off” is an unfavorable remark which can hurt your credit history and rating. If a certain lender fails with its attempts to collect payment from a borrower, the debt can be considered as a “charge-off”.
Simply put, this indicates that the lending company has given up with its debt collection efforts and that the debt has been counted as lost income.
Nevertheless, it does not imply that the debt has been forgiven. Lenders may still assign a debt collection agency or an attorney to take charge over the collection. In this case, a borrower may have a more difficult time recovering from debt or negotiating with a debt collection agency.
As you can imagine, having a “charge off” remark in your credit history can pull down your credit standing. It might also send a negative impression to other creditors. Trying to get approved for new credit can be harder when you have “charge offs” in your report. Hence, acquiring a record of charge-offs must be avoided. But how?
Pay Close Consideration To Your Payments
Making payments promptly is the key to maintaining an outstanding credit rating. Nevertheless, there could be times when you may fall short on your budget and paying by the due date may not be possible. In the event that you cannot submit your payment on time, a good thing to do would be to get in touch with your creditor and explain your situation.
Show your lender that you are willing to pay your debts by the due date but that your present circumstances do not allow you to. Ask your lender for an extension of your due date. Most lenders would oblige especially if they can see that you are willing to stay true to your obligations.
By letting your lender know about your situation, you can stop them from taking any harsh action against you. On the contrary, trying to hide from your lenders or ignoring their calls may only lead to a more serious trouble. Do not wait until your lender makes the first move to contact you. Take the initiative to speak with your lender before as soon as possible.
How to Deal with Charge Offs
Let’s say that you currently have a record of charge-off in your report? What should you do? Can you delete it from your report? Speak with your lender and ask if they can remove the record of “charge-off” from your report. Explain your financial situation and negotiate for a new repayment plan.
After your debts have been paid off, you should definitely check your credit file to find out if the “charge-offs” have been taken out. If not, you may send a dispute letter to the credit bureaus and ask them to remove the “charge-off” within your report. Upon receiving your dispute letter, the credit bureaus have 30 days to get in touch with your creditor and complete the investigation. Afterwards, you should be sent an updated copy of your credit report.