What do I do with a Charge Off on my credit report?

Oh this is a tricky question. One that has many different answers and that only you can decide which reflects best for you... I have had this question asked to me several times in the last week and I decided to write about situations...


So what do you do if you have a charge off on your credit? Well you will be sad to know that no correct answer exist for this question and it depends. It depends on what you want and what your ultimate goal is.

Here are some scenarios:

The first step you always do no matter what is to dispute your credit through the credit reporting agencies, Equifax, Experian and Transunion. Even if you don't know what in the world the charge offs are from. The creditor has to respond to them with your info and if they can't provide it they will remove from your credit report automatically. Always pay on time... Paying late is almost as bad as not paying in the lenders eyes.

http://www.equifax.com/home/en_us

http://www.experian.com/
http://www.transunion.com/
You have many charge offs and your credit score is in the 400's.
In this situation most people would tell you to pay it in order to get your credit score up and running... You are getting calls from bill collectors and they are very persistent and your stress level is at a 10 out of 10. Here is what I suggest.



First: Tell the bill collectors that you are not interested in talking to them and hang up.

Second: Don't pay. I know that sounds crazy and any creditor reading this would hate my guts for it. The reality is that your credit is shot and paying is like throwing a cup of water to a fire. It will only help that spot and not help the overall situation.

Third: You have to pay your current items on time from this point forward. No more charge offs and forget about the past. Current payments have more effect on your credit then old payments... So if you are paying on time now, it will give you a hire score now then old payments you didn't make... If you noticed, if you had good credit in the past and started paying late, your score dropped like a rock... Well it is like that going forward too, just not as inclined.

Fourth: If you are the type of person that has to pay. Pay the creditor not the collector... People make this mistake all the time and it drives me up the wall. You call the creditor and ask for them to remove the charge-off from your credit if you pay. Ask them if they have the authority to make that decision, if the person states that they don't have the authority, and then ask who does. Make them send you a fax or an email stating that they will remove charge off from the credit report... You will need this for backup... Have an idea on how much you can afford and tell them the truth. I can afford _____ if they say no then know that you tried and concentrate on future credit. DO NOT PAY THE COLLECTORS. They only care about how much they can get from you not clearing your credit.



You have an old Charge Off and your credit is above 700.

When people have high credit scores and they have a charge-off they usually say something like this. “What is that? I don't know what that is. Who is that from? That's not mine. Or they might say I really need to work on that."

Here is what to do.

First: Dispute it with the credit bureaus. This will take only take about an hour of your time and make get it off without you having to do any more work.

Second: Don't worry about it your score is good and if you have no major purchase in front of you let it fade out of your credit. It takes 7 years for a charge off to disappear from your report.

Third: Call the creditor and ask them to remove it from your credit report... If you still do business with them tell them that you are valuable customer still and want it removed.

Fourth: Pay the creditor not the collector... If you are getting a mail piece from a collection agency, smile and throw it away. Your credit is good.

Fifth: Focus on your current credit and keep records of your current dispute. If anyone ask tell them "I'm currently disputing these items here is the things I have sent to them."



Your credit is marginal and you have old and new Charge offs.

This is the second most common kind of credit it involves people who are either on the way up or on the way down on credit. The rule is to focus on the current credit as current credit has more effect then old credit.



First: Look at the age of the charge offs and concentrate on the new ones. Don’t' forget to tell the collection agencies you are not interested in talking to them.

Second: Call the creditor and ask for them to remove the charge off if you pay them. Get them to email you or fax over confirmation of removal. In hard times they want as much money as they can get. Perfect time to settle is in times like now... Use that to leverage your negotiations. Ask for the person who has the authority to remove the charge off.

Third: Keep records of your fight for your credit... If creditors see that you care about your credit they are more likely to give you loan then someone who gives a flip.

Fourth: Keep all your current revolving credit good... This will help your credit score. The older the charge off the less effect it will have on your score.



Thanks.

About Me: I have been working in the automotive industry for 10 years and have seen every kind of credit imaginable. Being in the industry has taught me to understand what lenders are looking for in credit. What they like and what they can't stand... These tips can help you save money, improve your credit score, and help you deal with those hard decisions about credit... Know that the past is the past and if you care about your credit the best day to start working on it is TODAY.