How to Remove a Charge-Off From Your Credit Report

A charge-off can significantly damage your credit score because the creditor will keep reporting it to the credit bureaus until it’s paid. Your credit score will keep dropping the longer the charge-off remains unpaid on your credit report.

If the creditor contacts you about an unpaid charge-off, attend to it immediately. 📳

Who knows? The charge-off might be inaccurate.

According to a 2024 study by Consumer Reports, the number of complaints about credit report inaccuracies grew from 165,129 in 2021 to 443,321 in 2023.

If your charge-off was inaccurately reported to the credit bureaus, you can have it removed without paying a cent. 

A charge-off that was accurately reported to the credit bureaus will be harder to remove from your credit report… BUT still possible. 😉

In this article, we’ll teach you three methods for removing an accurate charge-off from your credit report.

What Is a Charge-Off?

A charge-off happens when a creditor determines an account is uncollectible because it’s way past overdue.

On loans, “way past overdue” can be 270 days. For credit cards, it could be 180 days.

When an account hits the overdue threshold,  the creditor declares its status as “default,” closes the account, and removes the debt from the books.

The creditor can sell the debt to a third-party collection agency. If this arrangement pushes through, the creditor becomes the “Original Creditor” and the agency becomes the “Creditor.”

You remain the Debtor.

The agency will contact you via phone, email, and letters in an attempt to collect the debt. If the debt remains unpaid, the creditor can sue or drag you into court.

How to Remove a Charge-Off From Your Credit Report

How you remove a charge-off from your credit report will depend on whether it was inaccurately or accurately reported to the credit bureau.

You can file a dispute with the credit bureau if the charge-off was inaccurately reported.

If the charge-off is accurate, you can try to have it removed from your credit report using these three approaches:

• Negotiate a settlement price
• Propose a payment plan
• Appeal via a Goodwill Letter

💡 Pro Tip: If the original creditor or debt collector agrees to your charge-off settlement proposal, draft a comprehensive agreement and have them sign it.

How to Remove an Inaccurately Reported Charge-Off From Your Credit Report

The most effective way to file a dispute with the credit bureaus is to send certified mail.

1. Prepare a letter to the three credit bureaus with the subject line: “Charge-Off Dispute.”

The addresses of the three credit bureaus are as follows:

Experian

P.O. Box 4500
Allen, TX 75013, USA

TransUnion

P.O. Box 105283
Atlanta, GA 30348-5283 USA

Equifax

P.O. Box 740256
Atlanta, GA 30374-0256

2. Ask the credit bureaus to remove the inaccurately reported charge-off from your credit report.

3. Include the following information and documentation in your letter:

• Full name
• Home address
• The details of the charge-off you want to be removed
• A copy of your credit report with the charge-off in question highlighted
• Hard copies of documents that support your dispute

Send your dispute letters via certified mail and request a Return Receipt to confirm the credit bureaus received them.

💡 Note: Alternatively, you can send the dispute letter directly to the original creditor or the debt collection agency and try to resolve the issue from their end.

What Happens When the Credit Bureau Receives Your Dispute Letter?

The credit bureau has 30 days to investigate your dispute. ⏳

Here’s a rundown of what happens when the credit bureau receives your dispute letter.

• The credit bureau will forward a copy of your dispute letter and the enclosed documents to the creditor who reported the charge-off. The creditor will be required to investigate your claim.
• The creditor will submit the results of its investigation to the three credit bureaus.
• If the investigation shows that the charge-off was inaccurately reported, the credit bureaus will remove it from your credit report.
• The credit bureau will send you a copy of the investigation results and a copy of your adjusted credit report.

The Fair Credit Reporting Act (FCRA) was established to empower consumers to challenge erroneously reported debt on their credit report. It also mandates the credit bureaus to investigate the dispute and have it removed if the charge-off was proven to be inaccurate.

💡 Pro Tip: You can ask the credit bureau to forward “Notices of Correction” to entities that requested a copy of your credit report in the last six months.

How to Remove an Accurately Reported Charge-Off From Your Credit Report

Removing a legitimate charge-off from your credit report will be trickier but still possible. You’ll have to negotiate with the original creditor or the debt-collecting agency.

There are three approaches to removing the legitimate charge-off from your credit report: Negotiate a settlement, propose a payment plan, and file an appeal with a Goodwill Letter.

1. Negotiate a Settlement

Review the components of the charge-off.

• Are there interest charges?
• Did the original creditor include penalty fees?
• Does the breakdown include items you didn’t pay for?
• How old is the charge-off?

Write a letter to the agency and ask if they can reduce the charge-off and remove it from your credit report once fully paid.

Determine the amount you can pay for a lump sum. If the adjusted balance is more than you can afford, propose a lower price, but offer to pay in a lump sum.

If the agency doesn’t agree, then move to Plan B.

2. Propose a Pay-to-Delete Schedule

Assuming your current financial situation prevents you from settling the charge-off, propose a pay-to-delete schedule to the agency and send it via certified mail.

Pay-to-delete is an arrangement where you propose to the creditor that you’ll settle the amount of the unpaid bill in exchange for having it deleted from your report.

• Propose an amount that you confidently and consistently meet on the due date.
• Expect the agency to counter with a shorter payment schedule.
• Don’t accept a payment plan that you aren’t comfortable with.

If your pay-to-delete proposal isn’t accepted, move to Plan C.

3. Appeal Via a Goodwill Letter

Write a Goodwill Letter to the agency explaining why you couldn’t pay the debt. Provide details of your financial situation at the time.

Examples of situations that could sway the agency in your favor are:

• You closed down your struggling business.
• You were laid off from work.
• You got seriously ill and couldn’t work for six months.
• You got a debilitating injury that prevented you from working.
• You resigned from work to take care of an ailing relative.

Remember, you can only remove inaccurate debt from your credit report.

If your payment proposal or Goodwill Letter is approved, debt collectors are mandated by the FCRA to report accurate debt.

The creditor might still report the charge-off to the credit bureaus, especially if the payment proposal isn’t approved in writing.

What Happens If You Can’t Remove a Charge-Off?

If you can’t remove a charge-off, the only thing you can do is wait for it to fall out of your credit report.

As mentioned, a charge-off can stay on your credit report for up to 10 years. It could be removed earlier if the statute of limitations in your state is shorter.

The silver lining is that the damage can’t get worse. The longer the charge-off stays on your credit report, the lesser its impact on your credit score.

If the charge-off remains on your credit report, shift your focus to rebuilding your credit score. The stronger your credit score, the more you mitigate the negative impact of the charge-off.

How Does a Charge-Off Affect Your Credit Score?

The creditor will report your charge-off account to all or one of the three major credit bureaus – Experian, TransUnion, and Equifax.

The charge-off will be included in your credit report and will negatively impact your credit score.

Remember, creditors report to the credit bureaus monthly.

If the creditor reports that your account is unpaid after 30 days, your credit score will already take a hit. The hits keep coming, harder, and more impactful on your credit score if the account remains unpaid after 60, 90, 120, and 180 days.

Payment history accounts for 35% of your FICO credit score.

The longer the charge-off remains unpaid, the worse your credit score gets.

Frequently Asked Questions (FAQs)

1. How do I remove a charge-off without paying?

You can remove a charge-off without paying if it’s proven to be inaccurately reported. The credit bureaus are mandated by the FCRA to remove inaccurately reported debt from the credit report.

2. Do charge-offs go away after 7 years?

Yes, charge-offs can go away after 7 years or less depending on the statute of limitations in your state.

3. How do I fix my credit score with charge-offs?

You can fix your credit score with charge-offs by having it removed from your credit report if it’s inaccurately reported.

If the charge-off is accurate and remains on your credit report, you can mitigate the damage by building back your credit score.

Related articles: What is WFDS On Your Credit Report & How to Remove It

Summary

Send a dispute letter to the credit bureaus if an inaccurate charge-off was erroneously recorded in your credit report. Ask the credit bureaus to investigate your dispute and provide them with supporting documents.

Negotiate the settlement of the debt with the creditor if the charge-off is accurate. You can negotiate the final amount of the settlement, propose a pay-to-delete schedule, or appeal for understanding with a Goodwill Letter.

If negotiations fall through, your only option would be to wait seven to 10 years until the charge-off is removed from your credit report.

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