charge-offs
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charge-offs
| Thu, 03-09-2006 - 9:05pm |
What does it mean when an account is listed as a charge-off on your credit report? We had some bad (very past due accounts) that just got paid off (some with settlements) but they are listed as charge-offs on the credit report. It may just need some time to update status but what exactly does charge off mean?
Thanks!

Charge off means your creditor gave up attempts to collect your debt. The only way they can clear their books of the debt is to charge off the debt. The account will show status as charge off and the unpaid balance. If you later pay off the debt the account will still show it was charged off and the balance will be zero dollars.
Charge off is a derog on your credit history. Even if you pay off the debt, the account will remain charged off. The charge off status will not go away on your reports until 7 years have passed.
After a couple years of consistently good history, charge off derogs don't hammer your score or trigger higher interest rates like they will if they are recent. It is not uncommon for most people to have credit histories that show they went through a rough patch. We are all human and life happens. It's how you recover and handle your financial obligations afterwards that speak to your creditworthiness.
Hope this helps.
Carolyn
Yes, don't get too discouraged about seeing these.