How to remove a charge off from your credit report?

credit scores marked "good" on paper

A charge off is a negative mark on your credit report that shows that you haven’t paid your credit card bill in at least 180 days.

Creditors don’t look on charge offs as a small oops. Instead, it shows that they can’t trust you to fulfill your financial obligations. If you have a charge off on your credit report, you can remove it.

But removing it needs to be part of a comprehensive credit improvement strategy.

This guide will show you how to remove a charge off the right way.

This guide assumes that the charge off is part of an accurate credit report. If you need to dispute an erroneous charge off, follow our basic guide to fixing your credit score.

Pay your current accounts

Removing a charge off from your credit history requires negotiating with creditors. This involves paying your creditors, and to pay creditors you need money. If money is tight for you, then removing a charge off from your credit report needs to take a back seat.

First focus on providing for your basic needs. Then focus on paying at least the minimum balance on all your current accounts each month. This is the best way to improve your credit score.

On time payments have a greater influence on your credit score than removing a charge off. Not only that, if you can’t make current payments you’ll end up in this situation again. Start with your current accounts, and prepare to remove the charge off when you have money saved.

Fend off creditors until you’re ready for them

As you get your financial house in order, you need to fend off creditors looking for your money. To do this, you need to know your rights. Debt collectors cannot threaten you or tell anyone about your debts. You can even stop them from contacting you.

This is what you should do when a debt collector contacts you. First, ask for the account number, the original financial institution that lent you the money, the amount owed. Second, ask for a company name and address associated with the debt collections agency.

The write the following letter to the company:

[Your Name]
[Street Address]
[City, State, Zip Code]
[Your Phone Number][Company Name]
[Company Street Address]
[Company City, State, Zip Code]

RE: Cease and Desist Collections Calls [Account Number]
Date: [Date]

To whom it may concern:

According to my rights under the Fair Debt Collections Practices Act, I request no further contact. You originally contacted me about the debt associated with [original debt account number] from [original financial institution] in the amount of [amount owed].

Unless you are informing me of a specific action such as a lawsuit, I expect no further contact. This letter is not an indication that I affirm the debt.

Sincerely,
[Your Name]

Make a copy of the letter and send it via certified mail. Pay for a “return receipt” so you’ll be able to document what the collector received. Once the collector receives the letter, they cannot legally contact you again. The only exceptions to this are if they are confirming they will not contact you or filing a lawsuit.

Save money to resolve your charge off

save money sign

Even though your creditors won’t hound you, you need to save money to negotiate with them. If you can save close to the original amount owed, you have a good chance of negotiating with your creditors.

Your goal is to get a debt collector to accept a “Pay for Delete” offer. By and large, debt collectors want money more than they want to damage your credit history.

If you can pay most or all the amount you owe to them, they may be willing to accept a deal with you.

Negotiate with Debt Collectors

Once you have the money you need to negotiate, contact your debt collectors. Once you have cash in hand, you have some amount of negotiating power. At this point, you may want to work with professionals from Lexington Law. These debt specialists know the debt collection business and can do the hard work on your behalf.

You could also negotiate on your own. This is how you do it.

Start by writing a respectful but powerful letter that offers a win-win situation. This is a pay for delete offer. Debt collectors want your money, and you want a clean credit history. Both of you can get what you want. Use the following letter as a template, and send it via certified mail. When you send it pay for a “Return Receipt” so you know your creditors got the offer.

[Your Name]
[Street Address]
[City, State, Zip Code]
[Your Phone Number][Company Name]
[Company Street Address]
[Company City, State, Zip Code]

RE: Offer for Account Number [Account Number]

Date: [Date]

To whom it may concern

You contacted me about [your account number] on [date]. At the time, you confirmed that I owed [amount].

Please be aware, this letter does not constitute a promise to pay. I am not affirming the debt. Rather this is an offer. I wish to settle the debt above in exchange for removing the derogatory information from my credit report. It is not a payment agreement unless you provide a response as detailed below.

As a collections agent, you have ability to report this debt to the credit bureaus as you deem necessary, and to change the listing. You have this right as an information furnisher.

I will pay [this debt in full / $XXX as settlement for this debt] in return for your agreement to remove all information regarding this debt from the credit reporting agencies within ten calendar days of payment. You must also agree not to discuss the offer with any other party except the original creditor, [original financial institution].

If you agree to the terms, I will send a certified payment in the amount of [$XXXX.XX] immediately.

If you accept the offer, please prepare a letter agreeing to the terms. This letter should be signed by an authorized agent of [Collection Agency]. The letter will be treated as a contract. The contract will be subject to the laws of my state.

Please forward your agreement to the address listed above.

Sincerely,
Your Name.

Once you send the letter, you need to wait for the collection agency’s response.

Settle your debt or wait for a new opportunity

If a debt collector agrees to settle your debt according to your terms, send them a certified check. Send this via certified mail and pay for a “Return Receipt.” Included in your settlement, you should include a copy of the letter where they agree to the terms outlined. Do not give the collections agency access to your bank account. Unscrupulous debt agents could drain it.

Unfortunately, a creditor might not accept your pay for delete offer. Although the letter makes a strong case, creditors do not have to accept your offer. If they don’t you can wait for a new opportunity.

What are you waiting for? You’re waiting for the debt collector to contact you with their offer. Alternatively, you’re waiting for your the current collector to sell your debt to another. Most charge offs get bought and sold multiple times. If one collector doesn’t accept your offer the next one might.

If resolving a debt is more important than removing the charge off from your credit history, you can negotiate a settlement offer with the debt collectors. Settling the charge off will not improve your credit score. However, it may feel good to put the debt behind you.

Either way, remember that a charge off will only stay on your credit report for seven years. The more good credit behavior you add to your report, the less a charge off will influence your credit score. Even if you’ve had poor credit in the past, you can improve your score.

Is removing a charge off part of your path to a great credit score? Let us know how we can help.

1 thought on “How to remove a charge off from your credit report?

  1. Good points. I think if the amount is large then a credit counseling professional will be better to negotiate.

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