A charge-off is a situation where the creditor writes off your account as a loss and stops any future charges on it. It is expected that you would pay for a loan on time when you borrow it. However, if your account gets delinquent for not making your payments, the creditor may stop further charges on the account after 180 days.
The creditor then adds negative information to your credit report at the credit bureau.
Unfortunately, this negative information may significantly impact your credit score, causing you to lose several points. It can remain on the report for at least seven years. Finding a way to remove a charge off is a great step toward building your credit score.
Working with a Credit Repair Company
A credit repair company is a firm whose work is to find ways to help build the credit scores of individuals who defaulted on their payments earlier. The company can indeed help you remove the negative information on your credit report in various ways. However, remember that there is a fee for the service.
These companies do what you can do alone. However, they are experts who have done it repeatedly. This means they can have the report removed a lot quicker than when you do it yourself.
How Do Credit Repair Firms Help Remove Charge Offs?
Dispute a Charge off
The companies you do business with share details of how you pay back loans and bills to credit bureaus. The credit report repackages this information and sells it to companies that need to ascertain your creditworthiness.
The law allows you to dispute with the credit bureau any information that is inaccurate or incomplete. A credit repair company can act on your behalf and dispute the report. The credit reporting agency has 30 days to investigate and correct, delete or verify that the information is accurate. If the results are in your favor, the report is removed.
Negotiate a Pay for Delete
The credit reporting company can make an offer for you to settle the debt any related charges in exchange for removing the charge off. This option only works if you have an unpaid balance.
It is legal for the creditor to ask a credit bureau to remove any charge-offs on your account. However, players in the industry frown upon the practice. Therefore, you need an experienced negotiator such as a credit repair firm to lead the negotiations and get the deal in writing.
What If The Charge-Off Is Not Removed?
If the charge-off negotiation hits a dead end, you have to wait for at least seven years to have the report struck out of your credit score calculations. The statute of limitation may vary from one state to another, but seven years is the average. However, a credit report company can try to have a charge off removed in as many ways as possible, which you may not as an individual.
Pick a reputable credit repair company with a proven record of helping people build their credit scores for your charge-off removal attempts.
Angela Kovacs of Van Buren Township, Michigan is the founder and CEO of Credit Repair Gal. A credit restoration firm in Michigan.