What Does Charge Off Mean On My Credit?

Failure to pay debts has very serious implications and you could end up having a charge off on your credit report.
 

   
A charge off occurs when the creditor states that the amount you owe them can no longer be collected. What does charge off mean on my credit you ask? Simply put, this negative mark would reflect on your credit report and would shave off substantial points from your credit score.

Many people often ask what does charge off mean on my credit because they do not have the faintest idea what it is. A charge off, second to bankruptcy, is deemed by many as the worst thing to appear on one's credit report. It happens when the account has not been paid for more than one hundred eighty days or six months, prompting creditors to charge off or write off a debt. Unfortunately, this does not mean that you no longer owe the debt; in fact, you are obligated to pay the due amount. Creditors often use this accounting procedure for tax purposes, when an uncollectable debt is deemed as a loss for them. Thus, they often attempt to collect the debt after you have been notified of the charge off, usually through a third-party debt collection service or an in-house collection program. They may request the amount to be paid in full since the original contract for the debt was not honored. Although, there are times that they can accept a partial payment for the debt, enabling them to report the account as "settled charge-off." The answer to the question what does charge off mean on my credit is that your credit score will be fined with as much as two hundred points, which would be an ominous sign especially if your current credit score is below 600. According to the Fair Credit Reporting Act, this negative notation will stay on your credit report for seven years plus one hundred eighty days from the date of the first nonpayment.

Apart from the question "what does charge off mean on my credit?," many debt ridden, desperate people, ask what can they do about it? First, contact the original creditor and find out the balance of your account. Let them know that you intend to pay your debt. Once you have paid the amount, ask the creditor to have the charge-off removed from your credit report. Check your credit report with the credit bureaus to verify that the account has indeed been updated to "paid charge-off". Try getting the habit of checking your credit report yearly for accuracy. Once you know the answer to the question, "What does charge off mean on my credit?" you would be better prepared to manage your finances.


  

Source: Credit Cards For People With Bad Credit Rating


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