How to Remove a Charge-Off from Your Credit Report

When you’re working to improve your credit, one of the last things you want to deal with is a charge-off. When a charge-off happens, your creditor usually sells your unpaid debt to a debt collector, and your credit scores take a hit.

As a credit expert, and a former NFCC-certified credit counselor, I’ve helped thousands of people improve their credit scores after negative events like this. But unfortunately, charge-offs are amongst the most difficult to recover from.

Depending on the starting condition of your credit, missed debt payments and charge-offs can cause your credit scores to plummet. And even if you manage to get the charge-off removed from your credit reports, which is very difficult to do, your credit scores might not bounce back right away.

If you want a shot at removing a charge-off from your credit reports, I strongly recommend following the tips below.

What is a Charge-Off?

When your creditor believes you are not going to pay back your debt, they will close the account and charge-off your debt as a tax loss. This usually happens once you fall behind by at least 4-6 months.

There are a few different things that will happen to you as a result of the charge-off.

For one, when your debt account is closed, you can lose some benefits you got from the account. For example, if it’s a rewards credit card, you can lose the rewards you’ve accrued.

Additionally, the creditor will typically sell your debt to a collection agency.

When this happens, you can expect to see the debt show up on your credit reports twice: once as the old account that was closed with a $0 balance, and a second time as the new collection account with a balance equal to your unpaid debt, plus any new interest charges.

How a Charge-Off Affects Your Credit

Charge-offs are bad for your credit scores. But what most people don’t realize is that the events leading up to the charge-off are what do the real damage.

Before your debt can be charged off, you usually have to miss at least four months of debt payments. Those missed payments could cause your credit scores to go into a practical freefall, especially if you had a high credit rating before the fiasco began.

I’ve personally worked with people who lost nearly 100 points from just one missed credit card or loan payment. With that said, you can expect to see your credit scores drop even more for each additional missed payment, and then again when your account is charged off.

As a result of this credit score damage, you might suffer these additional consequences in your financial life:

• Trouble getting approved for new loans or credit cards
• Being rejected when you apply for apartments or jobs
• Paying above-average rates for car insurance

When you miss a debt payment or you have a charge-off, the negative information stays on your credit reports for seven years. The older the information is, the less it impacts your credit scores and your overall finances.

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

Thanks to the Fair Credit Reporting Act (FCRA), you have the right to get incorrect information removed from your credit reports, including charge-offs.

However, if the charge-off on your credit reports is accurate, even paying it off isn’t likely to get it removed.

If you want the charge-off erased from your reports, there are extra steps you can take to try and get it removed, but there’s no guarantee you’ll be successful.

Steps to Remove a Charge-Off from Your Credit Report

If the information about a charge-off is legitimate, your chances of getting it removed from your credit reports are slim. However, I’ve seen some people successfully get charge-offs removed when they follow one or more of these steps.

1. Validate the Debt

If a debt collector contacts you about an unfamiliar charge-off, proceed with caution. You should never send money to a debt collector without investigating to make sure the debt really belongs to you.

The best way to do that is to know your rights and asking for a debt validation letter. This is a letter that gives you all the details of the debt.

If, based on the validation letter, you can confirm the debt doesn’t belong to you, you need to dispute the debt in writing within 30 days.

2. Settle the Debt and Negotiate a Pay-for-Delete Agreement

What’s your best shot at getting a legitimate charge-off removed from your credit reports? Settle the debt with a lump-sum payment after negotiating with the creditor for a “pay for delete” agreement.

Settling the debt means negotiating a lump sum payment (typically less than what is owed) with the creditor to settle the debt. Pay for delete can only happen after you settle the debt and should be considered a welcome bonus.

Pay for delete is an arrangement where you negotiate to have the debt collector remove the account from your credit reports in exchange for a lump sum payment that covers some or all of your debt.

You have to approach these agreements with a lot of caution in order to have any hope of a positive outcome. Here’s how to do it the right way:

1. After you validate the debt, contact the collector and attempt to negotiate a lump sum settlement in return for having the collection account removed from your credit reports.
2. If you can agree to an affordable settlement amount, ask the creditor to send you the terms of your agreement in writing. Their letter or email should include the following details
   • Your account number and contact information
   • The debt collector’s name and contact information
   • The payment amount you’ve agreed to
   • A clear statement that your lump sum payment amount will be accepted as “payment in full.”
   • A statement that once your payment is received, the account will be removed from your credit reports.
3. Once you receive their letter, send your payment via certified mail and pay for a return receipt. Keep the receipt for your records.

Just keep in mind that the creditor is under no legal obligation to follow through with their end of the agreement. At the end of the day, this approach will cost you money, but it’s not guaranteed to work.

3. Dispute Errors with Credit Bureaus

If there’s a charge-off on your credit reports, and it’s there by error, you have the right to have it removed. You just have to follow a few specific steps to dispute the credit report error.

Alternatively, if you made a pay-for-delete agreement, and the debt collector did not delete the account as agreed, you can try following this process as well.

There’s no guarantee it will result in the outcome you want, but going this route doesn’t cost you any extra money. Here’s how to file a dispute the right way:

1. Pull all three of your credit reports (for free) from AnnualCreditReport.com.
2. Identify the information that needs to be removed or corrected.
3. If possible, find documentation to support your claim. This might include a payment receipt or a letter from the debt collector.
4. Contact the credit bureau to file your dispute. Filing online is the easiest option but it’s not the only way:
   • Equifax: File online or send a Dispute Request Form to Equifax Information Services, LLC. P.O. Box 740256. Atlanta, GA 30374.
   • Experian: File online or follow the Dispute Instructions and send your dispute letter to P.O. Box 4500 Allen, TX 75013.
   • TransUnion: Submit your dispute online or follow the instructions to file by mail or phone.
5. Once you file, the credit bureau has up to 45 days to investigate and send you a response.

4. Request a Goodwill Deletion

If you’ve tried all the steps above, and you’re still looking for a way to get a charge-off removed from your credit reports, you might consider requesting a goodwill deletion.

With a goodwill deletion, you call or write a letter to your creditor and ask them to change or remove information from your credit reports. They don’t have to oblige, but you’re more likely to help you out if you try any or all of the following approaches:

• Ask to have the missed payments deleted, as opposed to the charge-off, since missed payments are more damaging, but creditors have a legal obligation to report accurate information to the credit bureaus.
• If applicable, remind them that you’ve had a long history of on-time payments with them in the past.
• Inform them if you had a financial hardship that caused you to fall behind on payments, such as involuntary job loss, a medical emergency, or a death in your immediate family.
• If applicable, include documentation that supports your claim of financial hardship.

Of course, your creditor may still say “no.” In fact, some financial institutions, and other agencies, such as Bank of America and the Department of Education, have policies against goodwill deletions.

5. Seek Professional Help

Okay, so you’ve tried everything, and the charge-off is still on your credit reports. What do you do next?

If the information in your credit reports is incorrect, you may need legal help to get it removed. One option is to file a complaint with your state’s Attorney General’s Office.

If the information on your credit reports is correct, the only thing you can do is wait for it to fall off. However, if you want to rebuild your credit while you’re waiting, reach out to InCharge Debt Solutions and talk to a certified credit counselor for one-on-one, professional guidance and tips through credit counseling.

What Not to Do

Should you hire a credit repair company if you want to improve your credit? Definitely not!

For-profit credit repair companies like Lexington Law or CreditRepair.com may seem legitimate, but they were cited by the Consumer Financial Protection Bureau (CFPB) for illegally charging upfront fees and engaging in deceptive, bait-and-switch advertising. According to the CFPB, for-profit credit repair companies often charge high fees, and they can’t guarantee any results.

With that said, you definitely don’t want to go to the other extreme and ignore a charge-off. Ignoring unpaid debt can lead to new interest charges and even lawsuits and wage garnishment.

Instead, make sure you respond to any letters or calls you get from the debt collector. I also recommend trying to save up money so you can eventually negotiate a settlement with the debt collector, if you have to do so, in order to avoid a lawsuit or qualify for a loan you need.

How Long Does a Charge-Off Stay on Your Credit Report?

A charge-off will have a negative impact on your credit scores for the full duration that it’s on your credit reports, which is seven years from when you stopped making payments.

So, let’s say you missed a few payments in 2024, and caught up in early 2025, but then stopped making payments in June of this year. The charge-off would stay on your credit reports until June of 2032.

There are some cases where a charge-off may be removed earlier. This can happen if the creditor made an error in reporting and you successfully dispute the inaccurate information with the credit bureaus, or if a creditor agrees to remove it after you settle or pay the debt. Certain legal situations, such as bankruptcy or state-specific consumer protection laws, may also result in an earlier removal.

How to Rebuild Your Credit After a Charge-Off

There’s a good chance that, after a charge-off, your credit scores will be very low. While that’s a tough pill to swallow, the silver lining is that credit scores are not set in stone.

You can always make improvements, as long as you practice healthy financial habits. Here’s what you can do to regain points:

• Add positive information to your credit reports by making all of your debt payments on time.
• Avoid carrying credit card debt from month to month. If you can’t afford to reduce your credit card debt, consider enrolling in a Debt Management Plan (DMP).
• If you have a loved one with good credit, have them add you as an authorized user to their credit card account(s). When they do so, their account information will appear on your credit reports and impact your scores.
• Don’t apply for any new loans unless you know you can easily afford to cover the monthly payments.
• Use annualcreditreport.com to monitor your credit reports, and file disputes if you find any errors.

Frequently Asked Questions

Can I Remove a Paid Charge-Off?

You can’t remove paid charge-offs or any other information from your own credit reports. If you pay the amount owed on a charge-off, the collection balance should be updated to $0, but the account will not be removed from your credit reports.

Does Settling a Charge-Off Improve My Credit Score?

Settling charge-offs does not improve your credit scores. In fact, your credit scores can drop if your credit reports show that you paid off a debt for less than the full amount you owe.

Will Removing a Charge-Off Increase My Score Immediately?

If you have negative information removed from your credit reports, such as a charge-off, you can expect to see a change to your credit scores in roughly 30-45 days.

How Long Does a Charge-Off Stay on Your Credit Report?

Charge offs stay on your credit reports for seven years from when you stopped paying the debt. So, if you stopped paying your debt in 2020, the charge-off will stay on your credit reports until 2027.

Confidently Remove a Charge-Off from Your Report

If a charge-off appears on your credit reports by error, you might be able to get it removed. The best approach is to file a dispute with the credit bureaus, and include supporting documentation with your dispute, if you have any.

Unfortunately, if the charge-off information is correct, it may end up staying on your credit reports for seven years.

Your best shot at getting it removed is negotiating a pay-for-delete agreement and getting the terms in writing. However, there’s no guarantee that the debt collector will uphold their end of the agreement. So instead of sending them money, you could be better off working with an InCharge Debt Solutions credit counselor to find proactive ways to rebuild your credit, manage your debt and improve your overall finances.