Charge Offs...What Exactly Are They?

What Exactly is a Charge Off?

If you consider yourself as someone with bad credit, chances are that you have at least one or more “charge offs” on your credit reports. A "charge-off" is a fairly generic term used in the debt and credit industry. A charge off is a term that simply means that the original creditor has given up collecting a delinquent debt. Once the creditor exhausts all collection efforts, it will typically charge the debt off and sell the debt to a third party - better known as a collection agency.

For most consumers, a charge off can be devastating to your credit history. Next to bankruptcy or foreclosure, a charge off is about the worst mark a person can have on his credit. It can prevent you from getting approved for a mortgage, car loan, credit card, or nearly any other type of new credit. Further, a single charged off debt could create multiple separate negative marks on a person’s credit history. This is due to the fact that a debt could be bought and sold multiple times as each party tries to recover lost profits.

As the debt is bought and sold over and over again, it is likely that each collection agency will place a negative mark on the person’s credit report. Some consumers report a long trail of charge offs on their credit report for a single debt! The Fair Debt Collection Practices Act and the Fair Credit Reporting Act police credit bureaus and collection agencies and prohibit them from providing misleading, inaccurate, or unverifiable information. It does not specifically prohibit a string of collection agencies from this practice. Although it is implicit that a collection agency should remove a credit report charge off mark once they sell a debt, it does not mean it is always diligent in doing so.

Therefore, the burden often falls upon the individual consumer to remove the inaccurate items by way of dispute letters, investigation requests, etc. Thus, a person dealing with even a single charged off debt may have a lot of work to do if they want to clear their credit history of charge offs. CreditErasers.com provides the tools necessary to get items like this removed from your credit history completely.

Removing marks such as collection accounts is vital in regards to credit repair. You can find all the tools and resources needed to remove such items at http://www.crediterasers.com/.

In closing, a charge off is something that consumers should try to avoid if possible. If you are delinquent on an account, try negotiating directly with the creditor. It is both in the best interest of both parties to avoid a charge off.

Your Success is Our Success,
The CreditErasers.com Team
www.crediterasers.com