How to Dispute or Remove a Charge-Off

How To Dispute Or Remove A Charge Off
GUIDE
John Ulzheimer
By: John Ulzheimer
Updated: June 23, 2020
Advertiser Disclosure

It can be tough to earn great credit scores when there are negative items on your credit reports. One such item is the so-called charged-off account or, informally, a charge-off.

If you have a charge-off on your credit reports, it’s only natural to wonder if there’s a legitimate way to have it removed. In many cases, you’ll need to be patient when it comes to charge-offs. The Fair Credit Reporting Act (FCRA) allows legitimate charge-offs to remain on your credit reports for up to seven years.

But, if a charge-off is incorrect or contains questionable information, it may be possible to get it removed from your report much sooner.

What Is a Charge-Off?

The term charge-off can be confusing. It does not describe, as some people believe, a debt that you no longer owe.

Instead, when you miss payments and default on a debt obligation, the creditor may write off the debt as a loss for tax purposes. This is called a profit and loss charge-off.

At this point, your creditor may report the status of your account as “charged-off” to the credit bureaus, which, in turn, will likely add the charge-off notations to your credit reports. That’s typically not good for your credit scores or for future financing applications.

Your original creditor may even opt to sell or consign your debt to a third-party debt collector (aka a collection agency) or debt buyer. Once this occurs, both the original account and the new collection account may appear on your credit reports.

Of course, even though charged-off accounts and collections can appear on credit reports, data furnishers (i.e. banks, collection agencies, credit card issuers) must follow the rules set forth in the FCRA. One important rule is that for a charge-off to remain on your credit reports, the reporting needs represent accurate information.

How to Dispute a Charge-Off

The Fair Credit Reporting Act gives you numerous rights when it comes to the information on your credit reports. For example, you have the right to dispute an item on a credit report with which you disagree.

Disputing a charge-off is actually a simple process. The credit bureaus give you three potential ways to submit a dispute: via mail, online, or over the phone.

Experian

TransUnion

Equifax

You can opt to handle the dispute process on your own and don’t need to hire anyone to help you. That said, some consumers prefer to hire a reputable credit repair company to manage the dispute process for them.

  • 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 form, 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
  • 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 form, 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

If you go this route, make sure to research the company in advance and understand the fees and terms of such a service before you commit.

The Credit Report Dispute and Resolution Process

Whether you dispute a charge-off on your own or hire someone to dispute it for you, the process is roughly the same. The Fair Credit Reporting Act requires the credit bureaus to complete the investigative process within 30 days under most circumstances, although the process almost always takes considerably less time.

Once a credit reporting agency receives your dispute, it notifies the data furnisher (i.e. the collection agency or creditor that reported the information in the first place) that you disagree with information on your credit report. The data furnisher must then investigate your claim.

Charge-Off Graphic

Verify the creditor’s name, dates, balance, account number, names of relevant parties, and payment history before disputing a charge-off. Image courtesy of LexingtonLaw.com

Typically, the data furnisher will check its records and review all relevant data to ensure that what it is reporting to the credit bureaus is correct. If it discovers a mistake, the data furnisher may direct the credit bureau to update your account accordingly or delete the item from your credit reports altogether.

If a data furnisher doesn’t respond to a credit bureau within the 30-day time frame, the account will be deleted from your reports because it is unverifiable.

Of course, there is a chance the charge-off you dispute will remain on your credit reports, especially if it’s accurate. If a data furnisher reviews its records and confirms that the information it’s reporting to the credit bureau is correct, it will likely verify the information and ask the credit bureaus to leave it on your reports.

What You Can Do If Your Dispute Is Unsuccessful

Just because you dispute a charge-off with the credit reporting agencies doesn’t automatically mean it will be removed from your credit reports. However, if the charge-off is verified and remains on your report, you may have a few other options to consider.

  • Send follow-up disputes. In the event you strongly believe that the charge-off is incorrect, outdated, or otherwise unverifiable, you may opt to send follow-up disputes to the credit bureaus. If you have additional proof that the information on your credit report is false, be sure to include this information with your new disputes. Be aware, however, that if you start filing frivolous disputes, the credit bureaus have the right under the FCRA to ignore them.
  • Notify the Consumer Financial Protection Bureau. When disputes fail to resolve credit errors, you have the option to submit a complaint to the CFPB. The CFPB will forward your complaint to the company in question and work to get you a response. Still, this doesn’t guarantee a deletion.
  • Add a Consumer Statement. If your charge-off is accurate and it remains, you may consider adding a consumer statement to your credit reports. This statement, which is normally no longer than 100 words, can be used to explain your side of the situation. These are free to add.

These additional actions can help remove charge-offs from your credit report if your first dispute is unsuccessful.

The Bottom Line

You don’t have to sit back and accept credit errors when they happen to you. The Fair Credit Reporting Act gives you rights that you can exercise.

But if the charge-off on your credit report is accurate, you can’t force a data furnisher or the credit bureaus to remove it from your report early just because you don’t want it there. And, as always, you can work to improve your credit as much as possible in spite of the charge-off and potentially offset some of the damage it’s caused.

Advertiser Disclosure

BadCredit.org is a free online resource that offers valuable content and comparison services to users. To keep this resource 100% free for users, we receive advertising compensation from the financial products listed on this page. Along with key review factors, this compensation may impact how and where products appear on the page (including, for example, the order in which they appear). BadCredit.org does not include listings for all financial products.

Our Editorial Review Policy

Our site is committed to publishing independent, accurate content guided by strict editorial guidelines. Before articles and reviews are published on our site, they undergo a thorough review process performed by a team of independent editors and subject-matter experts to ensure the content’s accuracy, timeliness, and impartiality. Our editorial team is separate and independent of our site’s advertisers, and the opinions they express on our site are their own. To read more about our team members and their editorial backgrounds, please visit our site’s About page.