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Credit Card Charge-Offs: Can They Be Removed from Credit Reports?

In my last post regarding Charge-offs and Collections, I wrote about how a lot of consumers become confused when they pull their credit reports and find an overdue credit card account reporting twice.  The same debt can't be listed on your credit reports twice, right? Wrong.  In fact, most credit card accounts that have been charged off by the original creditor are not only reported as charge-offs, but they're also reported as collections after they're sold or transferred to a third-party collection agency.  It's a double whammy to your credit scores and a very frustrating situation to find yourself in.

So, can you actually remove a charge off from your credit reports? And what if you pay off the collection?  Will the original charge-off then disappear?  What happens to the paid collection itself? I can't tell you how many times I've seen these questions in our Credit Talk Forum.  It frankly can be quite confusing, but the simple answer I give to our forum members is usually the same. Yes, charge-offs can be removed.  No, charge-offs won't disappear just because you paid off the collection. And finally, paid collections are just that- paid collections.  They will probably remain on your credit reports, and the FICO credit-scoring model doesn't really like them any more than "unpaid" collections either.  

Of course, the caveat here is that everything is negotiable when dealing with creditors, so success in removing collections or charge-offs from credit reports will vary from situation to situation. The key is to not be afraid to negotiate with your credit scores in mind.  While it's not always possible, many consumers have found success negotiating the removal of a collection when making payment in full.  If you don't ask for it, it's not going to happen, so push for it.  Ask multiple times, and don't give up the first time someone says it's impossible. If you do finally get a yes, get it in writing before doing anything else.

Likewise, it can't hurt to take some time after the collection has been paid off to send a goodwill letter to the original creditor requesting that they delete the charge-off now that the debt has been paid in full.  Remember, the original creditor has absolutely no incentive or obligation to remove the charge-off from your credit history, but it's certainly worth a try.  You may be surprised at the result. Lastly, the FCRA provides consumers with the right to an accurate credit report, which means credit bureaus aren't allowed to report anything that's inaccurate, incomplete, or unverifiable. Don't be afraid to dispute items that fall into these categories through the 3 major credit reporting agencies—Experian, Equifax, and TransUnion.

Credit reports often contain errors, and something as simple as a valid dispute could result in a quick deletion that otherwise might have damaged your credit scores for many years.

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Joshua Heckathorn's picture

Joshua Heckathorn was President of Creditnet, is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past ten years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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Quora's picture

Credit score lowered due to owing only $13? Is this easily fixable?...

I'll assume this is showing as a collection on your credit reports, which is why you're claiming it hurt your credit scores.  Removing collections/charge offs from your credit reports isn't always easy, but it can be done. [1]  You should first find...

Charged Off Chuck's picture

Nothing crushes a credit score like being charged off. Well... allow me to back up a little; a bankruptcy is worse. In my less responsible days I got a little behind on my bills and was charged off by my call phone provider. My credit score took a hard nose dive after that!