Charge Offs – You May Not Have to Pay
When you get a charge off on your credit report it will negatively impact your credit score. This comes about when an account becomes delinquent and no payment is made for 6 months.
To delete charge offs from your credit history you have to dispute the charge off. You can do this by sending a credit repair letter to the credit bureaus.
In your credit repair letter you should explain why the listing is incorrect. For example the account has never been paid late, it’s not your account or information is wrong.
Unfortunately when it comes to reporting on your credit report you are guilty until proven innocent. Meaning it is common for incorrect information to be on your credit report.
Congress passed the Fair Credit Reporting Act in response to complaints of inaccurate information being reported by the credit bureaus. This legislation simply says that if a listing can not be verified then the credit bureau must remove it from your credit report.
It is not un-common for one charged off account to result in many negative listings and a ruined credit report. Let me show you the process of what happens to a charged off account.
The original lender will take the outstanding debt and will sell it to a collection agency. This collection agency will try to collect on the debt. If they are unsuccessful they will be able to create a negative listing on your credit report.
Then the collection agency will turn around and sell your debt to another collection agency. This new collection agency will be able to report a negative listing if they are unsuccessful in collecting payment.
This process can go on and on, depending upon how large the debt is. Thus you can see how one account can turn into many negative listings on your credit report.
With a number of negative listings it will ruin your credit score. This will also make it hard to be approved for any new credit lines.
This is good to know before you pay an outstanding bill because payment does not mean that the listings will be removed. Instead I would recommend disputing the charge off before you take any step to repay the debt.
Filed under: Management