A charge off is what happens when a creditor has written a debtor’s debt off as a loss for the company.  Though it is easy to believe this is the creditor “canceling” the debt, this is not the case. All debtors are still responsible for the debt even after it has been charged off. A charge off usually happens after there have been 6 months, or 180 days of either no payment, or less than minimum payment made on the account. A charge off happens before the debt is sent to collections, which happens when another agency attempts to continue collection efforts on the debt. When an account is charged off, this means the borrower no longer has access to it to continue using it.

How Charge Offs Affect a Credit Score

Charge offs are negative marks on a credit report. When borrowers allow a lender to run their credit report, they will be able to see all the charge offs, and will use this record to determine whether or not they should lend to the applicants. When a creditor sees a lot of charge offs, they will not be able to extend credit because it shows the applicants do not have a good payment history. Though circumstances may have changed, most creditors won’t take the time to listen or see how applicants are different and dedicated to their debt repayment now than they were the when the account was charged off. The more recently the account was charged off, the worse it is for the credit score.

Depending on the state a debtor lives in, and the statute of limitations for that state, the judgment may stay on a credit report for seven years, or the length of time allowed by statute, whichever is longer. In California, for instance, a judgment may stay on file for 10 years, and be renewed for another 10 years, for a total of 20 years.

Credit Repair Options after a Charge Off

Even if paid, charge offs will stay on a credit report, marked “settled” or “paid as agreed” to show that the person eventually settled the account and paid off the debt. Even though the debt was finally paid, it can still have a detrimental effect on the credit rating. With a bit of professional help, charge offs can be removed from a credit report all together so it looks to potential future creditors as though they never happened in the first place.

Lexington Law Firm has been in business for over 19 years, having served over 500,000 clients in that time. They have removed 1,013,469 negative items from their client’s credit reports in 2009 alone. Here are some of their statistics from last year:

Items removed from credit reports:

• Bankruptcies: 9,713
• Charge Offs: 158,531
• Collection Accounts: 485,147
• Foreclosures: 2,567
• Judgments: 28,564
• Late Payments: 213,538

Visit Lexington Law’s website or call 800-496-3604 to speak with a credit professional from Lexington law about your situation now. They will help you get all your charge offs taken care of with ease.

Related posts:

1. How to Remove a Collection on Your Credit Report What is a Collection? A collection is an unpaid bill,...

Related posts brought to you by Yet Another Related Posts Plugin.