Controlling Charge-Offs On Your Credit

By Judy N Gray

Most individuals do not have any idea what to do about charge-offs when they show up on their credit report. A charge-off is an sign that the initial creditor has written the loan off as a loss, therefore they are no longer actively trying to collect on the loan. However, it still shows on your credit report and it is not a shock that most people do not know what to do about a charge-off. Should they pay off their contract or should they leave it alone?

A creditor will write off the loan as a loss if they are incapable to collect within a specific period of time. It is more advantageous for them to write it off as a loss if they do not believe that they will ever be able to collect it. Many times they do refer it to a collection agency however, and this can sometimes lead to duplicate listings on your credit report because the original lender and the collection agency are both reporting to the credit bureaus even though there is just one account.

A negative credit listing, such as a charge-off is expected to stay on your credit report for a period of 7 years, however that is 7 years from the date of the last movement on the account. So if you pay off an old charge-off to eliminate it from your credit report, it only serves to bring the derogatory credit forward as the 7-year time period begins again. So it may be more negative to you to pay if off than it is to leave it alone since the poor credit will be brought forward. This is especially true when you have good new credit that you have been working on.

No matter what the state of affairs may be, before you ever pay off any sort of older debt, such as a charge-off or a collection account you need to make sure that you get an agreement in writing that after the debt is paid off they will delete it from your credit report. This process is called a "Pay for Delete" and it is actually the only way to protect yourself from additional poor credit being reported on your credit report about that account.

You have the right to dispute any bad credit on your credit report under the Fair Credit Reporting Act or the FCRA. That includes charge-offs, collection accounts, repossessions, tax liens and even foreclosures and bankruptcies. The credit bureaus have a precise period of time after receipt of a letter of dispute to either authenticate the truthfulness of their derogatory reporting or erase it completely from your credit report.

Once you begin sending in your dispute letters to repair your credit, it is vital that you keep painstaking records. Make sure and keep a copy of every communication that you send and also every communication that you get in return. The credit bureaus will have 30 to 45 days to attest to the bad listings and then an additional 5 days to answer back to you. It is your responsibility to follow up with them and make sure that everything is completed in a timely manner. You must also realize that it may take more than one letter to get results so you will need to make sure that you are persistent.

You may do all of the work to repair your credit on your own, in spite of this, it can be time-consuming and confusing and you may decide that it is more cost-effective based upon the time involved and the knowledge required to hire a expert. A professional credit repair organization has the expertise and experience to help you through this confusing process and while it is not essential you may consider that your time is better spent on your own job and your own life and delegating to someone else is an advantage for you.

You can get charge-offs and other bad credit listings deleted from your credit report. There are just some simple actions obligatory for credit repair. You must also start rebuilding and get some good credit on your credit report that can override the bad. - 31382

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