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Charge Offs - You May Not Have to Pay
By Justin Hutto | August 7, 2008
Charge offs are detrimental to a good credit score. They occur when an account becomes delinquent 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.
The way our credit system works is you are guilty until you prove your innocence. What I mean is the incorrect information is true until you prove otherwise.
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 also common for one charge off account to become many negative listings and ruin your credit score. Let me explain what happens to an account once it is charged off.
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.
The collection agency will then sell your account to another collection agency. The new agency will also try and collect and if unable they will report yet another new negative listing.
This process will continue dependent upon the size of the account. So one account can become many negative listings and ruin your credit score.
If you get multiple negative listings your credit will be in bad shape. It will become extremely difficult to get approval for any new lines of credit.
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.
Topics: Finance |