If you find a charge-off on your credit report that you believe is an error, or if a valid charge-off stays on your credit report for more than seven years, you can contact one of the three major credit reporting bureaus to have it removed. The charge-off will still have a negative effect on your credit, but future potential creditors will look more favorably on a charged-off account that is paid than one that isn’t. Although you will likely be paying a third-party collector rather than the original creditor, you’ll still want to pay off the debt. These demands can be insistent and, in some cases, aggressive. Chances are, the original creditor has sold the debt to a collection agency, who will continue to make demands of the consumer to pay the debt. By law, a consumer is responsible to pay back any debt they take on until it is paid, settled or discharged in bankruptcy. The original creditor deciding to take a loss does not make the debt disappear. All these derogatory marks together have a long-lasting cumulative negative effect on the consumer’s credit. Keep in mind, by the time an account reaches charge-off status, it will have already shown up as several months of late payments and possibly, that the account was in collections. It will then show up as a derogatory mark on a consumer’s credit report for up to seven years. Once a creditor writes off the debt as a loss, they will report the charge-off to the credit reporting bureaus. The creditor reports it as a loss, but the consumer is still responsible for paying the debt, usually to a debt collector. This can happen with credit cards, mortgages and other types of consumer debt. When a creditor abandons efforts to collect payments on a debt, the account is considered charged off. Let’s take a closer look at how charge-offs affect consumer credit. And what credit they are able to acquire will come with exorbitant interest rates. Consumers with charge offs on their credit report will have difficulty obtaining any new credit. Of the many things that can affect a consumer’s credit report and score, having one or more accounts showing as “charged off“ is among the most harmful.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |