What Is A Charge Off On My Credit?

What is a charge-off and how does it affect your credit?

The rules of business and accounting  specifically require that non preforming debt be charged off, the reality if you are learning how to fix  bad credit and fix bad credit scores you will be having to deal with a charge off and you should get some kind of idea on just what is a charge off when it pops up on your credit report because it will. This is directed at people who do not pay their bills and if the lender sees that there is little hope of collecting, well, these accounts are sold or forgiven or sent away to collection.  Now even though when they are charged off then sold to a collection agency they are usually sold for 20 to 30 cents on the dollar.  That does not mean that if you owed $1,000.00 now you only owe $200.00.  You will still owe the original amount and that is what the collection agency will want that is how they make a profit and make money.

So lets make sure you understand that a charge off does not mean you do not owe the money any longer, rather your account just goes into another form of collection  . The term charge off  is an internal indicator of what happens to the account . On the outside , this is devastating for your credit report and you should do everything you can to prevent this.  Do not to let this happen. Why? Because it will take you 7 years to remove it from your credit file.  If anything what you may want to do is go for a settlement agreement with your current creditor before it does get charged off and sold.  The reason is that when it comes up on multiple times from different collection agencies it can really be a lot of work on getting your credit report nice and clean again by disputing all the different accounts that really is just from one bill.

Once an account is charged off you lose any opportunity to settle with the original lender. Sure, you can try to cut a deal with the collection agency or the outside lawyers, but the credit report remark and status will not be changed from the original lender. If you want to know how to repair bad credit, this is where you start because every question I get like, “tell me how to increase my credit score” starts here.

Do not let it get the point where the lender will charge off your account.

When the lender sends your file to collection . Now, you are going to be dealing with people outside the employmnt of the bank . These collection agencies work on commission and these people make a lot of money because they know how to deal with people that normally do not pay that is why they do what they do.

They are also very restricted as to what they are able to accomplish as far as your work in credit report repair because the account is already affected by the banks decision to charge it off.

How do you prevent this?

If you tell the  bank or lender not to contact you except through mail , then you are cutting off communication with your credit card company. This is good and it is also bad. Good because you don’t have to field their nightly calls , but bad because you have no idea when they are considering your account for charge off.  But the reality is you do have some control over your debts and can learn how to fix bad credit.

You have to call them starting at 90 days that is usually when it goes into a different category and when the account is delinquent 120 days, they start to get itchy. This is when you make them an offer for creditcard forgiveness. You do this right before they charge off the account as not able to collect.  BEFORE YOU SEND ANY MONEY YOU GET IT IN WRITING.

The importance of your score will become very apparent when you apply for a loan whether it be to buy a home or a car loan.  Even credit cards will charge someone double the amount of interest to someone with bad credit vs someone with good credit.   If you want to have your dream home within reach and an affordable car loan best thing is to keep your credit score healthy.  If your score is not at its best then the best thing to do is to get your score up you just need to do the work and learn the systems.   What ever system you use to help fix  your bad credit keep in mind it well require you to learn a few things and require work on your part but it is do able, and fixing bad credit scores can be a reality for you if you are willing to learn and do some work.

For more information and ideas on how to fix bad credit and improve your credit stay tuned for more information but the reality is that learning about your credit or at least getting a handle on how to improve your credit is a wise investment not only for today but in your future.  You have the choice of paying thousands of dollars to a someone to do the work for you or you can learn how yourself and take control of your financial future and the choices you make but it can be done.  I wish the best and many successes in your future if you found that this information was helpful leave me a comment.

Ernie

Good Luck To Your Many Successes

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