Credit Report Charge-Off Removal Services in 2021

Credit Report Charge Off Removal Services
GUIDE
Adam West
By: Adam West
Posted: January 6, 2021
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The best credit report charge-off removal services won’t focus solely on charged-off accounts. While a charge-off can cause serious damage to your credit score, you may have other pesky negative items holding your credit rating down.

With the right credit repair service — such as those listed below — you can work on having your charged off account removed, while also polishing the rest of your credit history to make sure it’s application-ready.

And since these services put your account in the hands of a credit repair expert, you can rest assured that the task is taken seriously and handled efficiently.

Charge-Off Removal Services | FAQs

Credit Report Charge-Off Removal Services

Charge-off removal is just one facet of any credit repair service. These companies can also dispute any inaccuracies on your credit report with each credit bureau.

Studies show that at least 1 in 5 Americans have inaccuracies on their credit profile. The following services can help change your financial outlook if you’ve been affected by inaccurate credit reporting.

Most credit repair companies charge monthly for their services and offer a free consultation to go over your credit report before you decide to sign up. The amount of time needed to complete your disputes will depend on the amount of work needed and the number of disputes you have.

  • Free consultation: 1-855-200-2394
  • Most results of any credit repair law firm
  • Clients saw over 9 million negative items removed from their credit reports in 2016
  • More than 500,000 credit repair clients helped since 2004
  • Cancel anytime
  • Click here for sign-up, terms, and details.
★★★★★

4.9

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
See BBB Listing 2004 $89.95 10/10

Lexington Law is one of the best credit repair firms in the business because its team of paralegals and lawyers consistently help clients clean up their credit reports and give them a second chance at financial success.

The firm offers multiple service tiers to choose from, all of which include charge-off removal services. Each tier requires a monthly fee that you can cancel at any time. Lexington Law is the Credit Advisory Council’s top-rated credit repair service.

  • Free consultation: 1-855-200-2393
  • Average 40-point increase in Transunion credit score during first four months
  • Free access to your credit report summary
  • Three-step plan for checking, challenging and changing your credit report
  • Online tools to help clients track results
  • Click here for sign-up, terms, and details.
★★★★★

4.5

Overall Rating

Better Business Bureau In Business Since Monthly Cost Reputation Score
See BBB Listing 1997 $99 9.5/10

For more than 20 years, CreditRepair.com has submitted more than 19 million credit bureau challenges that have resulted in some serious credit score improvements for its clients.

Clients can access their account through a desktop computer or via an iOS or Android mobile application. The agency offers one all-inclusive service package that gives every customer access to the full range of credit repair services. Every prospective client gets a free consultation before signing up.

Sky Blue Credit Repair helped innovate the credit repair industry back in the 1980s and it continues to pave the way for new innovation. Clients have the option to pause their account instead of canceling it, which allows them to skip monthly payments until they are ready to restart the service.

Sky Blue does not have a tiered service structure. Instead, the company offers one single package for a flat monthly fee. If your spouse or significant other needs to work on his or her credit, you can take advantage of a couple’s discount during signup.

With the Credit Assistance Network, you can dispute up to an unheard of 45 items per billing cycle. Most credit repair services limit you to 20 or fewer disputes per month. Plus, you can take advantage of the Network’s identity theft resolution assistance and credit consultations.

As a client, you will receive 24/7 access to your client portal that shows real-time updates to your account and helps you track your credit repair progress.

What is a Charge-Off?

Late payments appear on your credit report starting at 30 days after the payment was due. A charge-off occurs when you completely stop making payments and the account is written off as a loss by the lender.

Late payments can be reflected on your credit report as 30 days late, 60 days late, and 90 or more days late. Around the 180-day mark, the lender assumes you are no longer going to make payments on your debt — this is often when your account is charged off.

Late Payment Reporting

A charge-off is essentially a change in record keeping, where your debt moves from active on the lender’s records to the bad debt category. This helps the lender report the loan as a loss on the company’s taxes.

When a charge-off occurs, the lender will then sell the unpaid debt to a collection agency for pennies on the dollar. The debt collector will then attempt to collect the money you owe for up to seven years.

A charge-off is among the worst items you can have on your credit report, as it shows that you have a history of not repaying your debts. New lenders will look very closely at this when viewing your application for financing.

And while you can choose to pay off the debt associated with your charge-off or collections account, the negative item will still remain on your credit history until the statute of limitations on the record ends. This is unless you arrange a pay-for-delete agreement with the original creditor, which a credit repair agency may be able to help you do.

Can a Charge-Off Be Removed from a Credit Report?

In some cases, you can have a charged off account removed from your credit report. The first and most obvious scenario is if the charge-off is not valid and should not be on your credit report.

This may happen if a lender accidentally (or fraudulently) reports a debt as a charged off account. You can dispute this report with each credit bureau. If you can provide proof that the report is inaccurate, it will disappear from your credit report and will no longer impact your credit score.

You may also be able to negotiate a pay-for-delete settlement where you repay all — or part — of the debt in exchange for the debt collection company or original creditor removing the charge-off from your credit file. Some experts say that this sort of debt settlement is unethical, but it happens regularly, and your paid charge off can help improve your FICO score and other credit scores through Experian, Transunion, and Equifax upon deletion from your credit reports.

Credit Bureau Logos

Disputes must be handled separately with each bureau.

It’s important to get any pay-for-delete settlement in writing before you submit your payment. While you can negotiate this sort of settlement on your own, you may find it easier to lean on a credit repair service.

These services negotiate these types of paid collection settlements regularly and may have a relationship with the lender that makes it easier to get the job done faster. These services can also potentially negotiate the removal of several types of charged-off and unpaid debt, including charged-off credit card debt, auto loan debt, or even simple late payment reports.

You can also negotiate this type of settlement with the original creditor on the debt, a credit card company, or with the debt buyer who purchases your debt.

Can Credit Repair Services Remove Charge-Offs?

A reputable credit repair company can negotiate on your behalf and attempt to have a charge-off removed from your credit report. While this tactic sometimes works, it is not guaranteed. Any credit repair service that promises you the removal of any negative item on your credit file is not following the rules of the Credit Repair Organizations Act (CROA).

A charge off occurs when you stop making payments on your debt. Most lenders do not take kindly to borrowers who don’t pay their bills. If you want to negotiate a debt settlement that includes removal of the paid charge off with each credit reporting company, you have to rely on the original creditor accepting such a deal.

Not every credit card company or lender will accept these terms, but some may consider accepting your full payment in exchange for deleting the unpaid debt report with each credit reporting agency.

Consider hiring a reliable credit repair company, such as those listed above, to handle any negotiations for you. These companies have a working relationship with many lenders that may work in your favor when it comes time to strike a deal.

Otherwise, you’ll have to rely on the creditor accepting a deal that you propose — which may not be something it wants to do after you failed to repay them.

How Long Does it Take Until a Charge-Off is Removed From Your Credit Report?

Technically, a charged-off account can remain on your credit report for seven years, but it could hang around for much longer than that.

When you stop making payments to your original lender, the financial institution could report your negative payment history as a charged off-account to each credit reporting agency. At that point, the seven-year statute of limitations clock starts ticking.

At some point, the original lender may choose to sell the debt to a debt buyer or debt collection agency. If that happens, the clock restarts on your statute of limitations.

At any point during that time frame, the collection agency could sell the debt to someone else. This can again restart the clock.

You may also unknowingly do certain things that reset the clock to zero, including:

  • Acknowledging that you owe the money when talking to the debt collector
  • Making a payment toward the debt
  • Create a debt repayment plan to eliminate the debt

A debt collector may approach you over the phone and seem sympathetic to your situation. In many cases, this is done to urge you to acknowledge that you owe the debt — which restarts the statute of limitations clock.

Can I Settle a Charged-Off Account?

If you have a bad credit score, you may consider settling a charged-off account in hopes of improving your credit history, but this only works sometimes.

A charge off account is typically one that hasn’t been paid in at least 180 days. While you can still make payments toward this debt, those late payments, and the subsequent charge-off notation, will still exist on your credit report.

The payments will not automatically remove those notations. In fact, they’ll remain there for up to seven years. The only thing that will last longer on your credit report is bankruptcy.

Chart Showing Time Items Take to Age Off a Credit Report

Some lenders may look past your bad credit score when considering future credit applications if they see that you at least did right by the lender and paid off the debt after it was charged off. This isn’t guaranteed, though, and will vary by lender.

You can also attempt to negotiate a pay-for-delete on your own or with the help of a credit repair company. Under this form of debt settlement, the original creditor will remove the charged off debt from your credit file in exchange for your paying the debt.

This form of settlement is completely up to the creditor and is not a guaranteed form of removal. Do not pay the debt in full expecting it to disappear from your credit file without first negotiating its removal in advance.

Should I Pay Off Charged-Off Accounts?

A charge off account can lower your credit score by 70 to 100 points overnight — and it doesn’t matter how much debt you owe. A $50 charge-off has the same effect as a $50,000 charge-off.

But once you pay that debt off, the negative notations remain on your credit report for up to seven years. You may be thinking there’s no point in paying off the debt if you’ll still be saddled with the penalty.

Some lenders may look more favorably at your future credit applications if you at least settled the charge-off by paying the debt. Others may even look past your bad credit score and focus more on your actions to rectify a bad situation.

Before you make a payment, though, contact the debt collector and ask for a debt validation letter. This will not restart the statute of limitations clock on the debt and will outline how much you owe and prove that the amount is valid.

And before you prep that first payment, attempt to negotiate more favorable conditions for your credit score. Perhaps the lender will remove the negative reporting if you pay the debt in full. If not, maybe you can negotiate the charge-off down to a single late payment.

How Many Points Does a Charge-Off Drop Your Credit Score?

A charge-off will cause more damage to a good credit score than it will to a bad credit score. Still, you should expect a hefty drop in your credit rating if you add a charged-off account to your credit history.

If you have a very good credit score (typically one in the 740 range or higher), a charge-off can create a 70- to a 100-point drop in your score. If you have a bad credit score (580 or lower), you may lose 30 to 60 points.

FICO® Score Range

Higher credit scores will suffer more from charged-off accounts.

This happens because a good credit score is reflective of your ability to repay debts on time and in full. A charge-off is a drastic change in your financial habits and will reflect as such on your credit score.

But if you already have bad credit, adding another negative item to your profile will hurt — but not as much as if you had a sterling history prior to the charge-off.

Will a Charge-Off Affect Your Buying a House?

A charge-off or collection account shows you failed to repay a debt. No lender will scrutinize your past financial history more than a mortgage lender.

As a result, most independent home loan companies will not consider your loan application if you have a recent charge-off on your record. Some may accept your application if your charge-off is in the distant past (five years or more) and you have had a spotless credit history since that mistake.

But if you’re in the market for a home loan and have a charge-off on your credit history, consider an alternative to a traditional mortgage lender. An FHA loan has far more forgiving approval standards and may not disqualify you based on a charge-off. This government-backed loan has helped millions of Americans who have less-than-perfect credit buy a home.

FHA loan requirements may also make it easier to secure your new home by accepting lower down payments and providing competitive interest rates for first-time homebuyers.

You can apply for an FHA loan through many mortgage companies or online lending centers. These loans work for a new mortgage or to refinance your current mortgage loan.

Does Credit Repair Work?

Credit repair’s track record of success is hard to argue with. But as with most things you buy, you should do some research before signing up for a credit repair service. Some companies make promises they cannot legally — or ethically — keep, and are the companies that give the industry a bad name.

You should also understand what a credit repair service can and cannot do before you sign up. These services are meant to help consumers delete inaccurate items from their credit reports. These include items that are not factually true, items that are not reported properly, or accounts that should have been removed due to their age.

What a Credit Repair Company Does

Image courtesy of Lexington Law.

If you really missed a payment to your credit card company, a credit repair service cannot magically make the negative reporting of that payment go away.

Many people go into these services expecting all of their previous mistakes to disappear. This isn’t realistic (or legal). As a result, some consumers leave negative reviews because their unfeasible expectations were not met.

Therefore, many reputable credit repair companies, including those listed above, provide free consultations before you sign up. During these virtual meetings, you will go over your credit report and create a plan to improve your credit score.

If you are not a good fit for a credit repair service — or if you can easily fix the situation yourself — the credit repair expert will let you know your options.

Compare Credit Report Charge-Off Removal Services Online

Charged-off credit card debt, auto loan debt, or other late payments can cause catastrophic damage to your credit score. And this damage can stick around for years and impact your ability to buy a home, get insurance, or even qualify for a job.

But there are ways to remove those charged-off accounts and get a fresh financial start. And with the credit report charge-off removal services listed above, you can hire someone to roll up their sleeves and get to work on getting you the credit score you deserve.

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