A charge-off will stay on your credit report for seven years from the date your original delinquency is reported to the credit bureaus. This seven-year timeframe stays the same whether or not your lender turns your account over to a collection agency or continues to handle your debt.
While you cannot remove a charge-off from your credit report before seven years have passed, the damage to your credit score does not have to last as long. Some credit-scoring models, such as FICO Score 9, do not factor paid collections into credit score calculations. So, if your charged-off debt is turned over to a collection agency and you pay the amount due, you could see improvement in your credit score once that debt is no longer factored in. Even if your credit scoring model does include paid collections, there are still a few steps you can take to improve your credit score.
How to Improve Your Credit Score After a Charge-Off
Build a positive payment history. Payment history typically counts for 35% to 40% of your credit score, depending on the model, so timely payments can help get your score back to its pre-charge-off level. As a result, we recommend setting your accounts up for auto-pay and reading our tips for avoiding missed due dates.
Limit your applications for new credit. Using credit wisely is one of the best ways to rebuild your credit, but too many credit applications (resulting in hard inquiries) in a short period of time can cause your credit score to drop. So, do some research on the best credit cards for your credit profile and check out the Offers page of your free WalletHub account for personalized recommendations. Then, submit one application when you’ve found the right card. If you don’t get approved the first time, consider applying for a secured credit card with no credit check.
Reduce your credit utilization. Credit utilization is a big contributor to your overall credit score, so if you can reduce your utilization ratio, you can see credit improvement. You can reduce your credit utilization ratio by gradually paying down your debt, limiting your spending to essentials, and getting a credit limit increase.
Dispute any inaccuracies on your credit report. Your credit score is calculated based on the contents of your credit report, so any errors (such as unauthorized inquiries or fraudulent accounts) could be weighing your credit score down. That’s why you should make a habit of checking your credit report often and filing a dispute for any inaccurate or fraudulent items.
While charge-offs remain on your credit report for seven years, you can start working on improving your credit score right away. Visit the Credit Analysis page of your WalletHub account for custom advice, and check the status of your accounts on the Credit Report tab (updated daily).
You cannot remove a charge off from your credit report unless the information listed is incorrect. If the entry is an error, you can file a dispute with the three major credit bureaus to have it removed, but the information will remain on your report for seven years if it is accurate.… read full answer
How To File a Dispute To Remove a charge off From Your Credit Report
Review your credit report to locate the charge off account.
Investigate the entry to confirm it is inaccurate.
Choose a dispute method (online, phone or mail) if the information is not accurate.
File your dispute via the chosen method.
Wait for the results (30 to 45 days).
If the information is correct and you pay off the outstanding debt, you can then ask the lender via phone or in writing to make a goodwill adjustment, removing the derogatory mark from your credit report. Although the lender is under no legal obligation to do so, goodwill requests are successful in many cases.
Note, the lender may also sell your debt to a collection agency, if it remains unpaid. The agency has the right to pursue further legal action against you.
Paying off a collection won’t remove it from your credit report. Negative information can still remain on your credit report for a period of 7 years. Typically, the only way to remove a collection account from your credit reports is by disputing it, and that only applies if the collection account is a product of error or fraud.… read full answer
If the account is legitimate but has been paid, contact the collection agency to request a goodwill adjustment. In other words, you're asking them to remove something negative but legitimate as an act of kindness or understanding. As the name implies, the collection agency is under no obligation to comply with or even consider your request.
Ultimately, even if you don't remove the collection account, having it show up as paid on your report will improve your creditworthiness to future lenders, as a sign of you taking responsibility for past mistakes.
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