How To Remove Charge-Offs Yourself

Credit reports are valuable tools you can use to understand your relationship with credit better. Credit reports communicate how well you manage your credit. The information contained in credit reports, both the good and the bad, influences your credit score. 

Professional entities, including lenders, employers, and utility companies, may also access your credit information to learn more about your financial habits over time. Your credit reports help others assess whether you can handle credit responsibility. Individuals with clean credit reports and higher credit scores can access lending products and opportunities that may not be available to individuals with bad credit.

People with credit problems can not only have their access to specific lending products restricted but they also may be charged more for essential services like different types of insurance coverage. Understanding what’s on your credit report, and how specific elements can damage your credit, is a significant step on the path towards a vibrant financial future.

A charge-off is one of the most harmful credit report entries, short of a bankruptcy. In fact, charge-offs remain on your credit report for at least seven years from the date they’re recorded — just like a bankruptcy. That’s because a charge-off is essentially a debt the creditor has recorded as “uncollectible” with the credit rating agencies.

In the article below, we’ll provide valuable advice that comes directly from credit experts on how to remove charge-offs yourself. We’ll also provide information on how to procure help from professional credit repair agencies.

Use Credit Repair Services or Do-It-Yourself (View sample “Pay for Delete” letter).

Review your credit reports on a regular basis. You can obtain a copy of your credit report from the three major credit reporting bureaus — Equifax, Experian, and TransUnion. You can navigate to annualcreditreport.com to access your credit reports.

You’re entitled to acquire a free copy of your credit report from each of the reporting agencies each week. 

Once you obtain your credit reports, review them to discover any inconsistencies with your personal financial statements and records. The reports will list any charge-offs you have, if applicable. 

Review any charge-offs to determine their validity and also to verify the details associated with each one. Be sure each charge-off listed on your credit report contains accurate balances and dates. 

If you do find any errors or inconsistencies in your credit report, it’s important that you dispute them before taking further action. You can dispute credit report information directly with the credit bureaus. 

You have multiple options to dispute charge-off information on your credit reports. You can contact the three credit bureaus by phone, mail, or online.

Be sure to communicate to the agencies why the charge-off information is inaccurate. Provide any documentation that supports your claims. Detailed information that supports your findings can be valuable to help ensure your dispute is fully understood.

The credit bureaus will then investigate the information you provide to them and let you know the status of your dispute. If the bureaus do not take any action to remove the charge-off on your credit report following their review of your dispute, you can contact them to determine if they need more information from you.

Once you’ve confirmed the accuracy of your credit report, you can make a decision regarding how to most effectively manage your charge-offs.

While it is possible to remove charge-offs from your credit report, many people prefer to have a credit repair company handle this delicate process on their behalf.

Credit repair companies likely have more experience than you do in working to remove charge-offs from a credit report. After all, that’s one of the services that credit repair companies provide to consumers. By relying on the experts, you can have confidence that they’re acting in your best interest and pursuing every avenue possible to rectify the situation for you.

Before engaging with a credit repair company, be sure to do your due diligence to determine whether they’re a reputable company. By reviewing online reviews of credit repair companies, you can gain an appreciation and understanding of other consumers’ interactions with the company. You may also gain insight into the company’s ability to solve charge-off issues for other consumers.

One of the best and most effective ways to remove a charge-off yourself is to communicate directly with the original creditor, not with a collection agency or other third-party settlement firm. The reason for this is it’s the original creditor who reported the charge-off to the credit bureaus and who can ultimately remove it.

Your Goal is to Accomplish 1 of 3 Things:

You’ll want to contact the creditor in writing, if possible, with a proposal for paying the debt in full. In writing to the creditor, you are trying to ensure at least one of the three following things happen:

1. Charge-Off Status Removed From Your Credit Report

This is the best-case scenario and what you are hoping they will agree to.

2. Charge-Off Status Changed to “Paid” or “Closed”

This is the most common case scenario and your best alternative to removal.

3. Charge-off Changed to a “Settled” Status

This is the least preferred solution because the term “settled” is often seen as being paid in collection.

Sample “Pay for Delete” Letter

Consumers can employ “pay for delete” letters to request the removal of items such as charge-offs from their credit reports. Below is a sample “pay for delete” letter that you can copy, paste, and use if it suits your needs. The letter explains your reason for sending it and informs the collection manager you wish to have the charge-off removed in return for payment.

Important: Get the Agreement in Writing Before Paying

You can also begin this process over the phone if you’re lucky (or tenacious) enough to find the right department and person to talk to. In any case, be sure to get any settlement you make with the creditor in writing before making a payment.

One thing to be especially cautious about is paying any amount toward a charged-off debt without first getting a signed agreement with the original creditor. Doing so can reset the clock on your charge-off, meaning it will be another seven years from the date you make the payment before the entry is removed from your credit report.

It’s important to note if the creditor does not agree to remove the charge-off, paying the debt will not immediately improve your score. A “paid” or “settled” status does not change the fact that it’s still a charge-off on your credit report. Your score will improve gradually with time if you choose to pay, but it will not have the same effect it would if the charge-off was completely removed.

At this point, it’s up to you to decide if paying the debt is worth it.