All You Need to Know About Credit Charge Off

If you are wondering what a credit charge off is, you have most probably found one on your credit report. Alternatively, you may have received a letter clarifying that you were denied credit because of credit charge off in your credit report. If you are not conversant with credit charge off, you might think that your creditor has let you off the hook for the debt. This article goes through all you need to know about credit charge off.

A credit charge off occurs when consumers are seriously delinquent on a debt. A charge off is a declaration by a creditor that a particular debt is improbable to be collected. The creditor declares your payment as a bad debt after one hundred and eighty days without making the minimum payment. You won’t be able to use your credit card for making purchases, and you won’t access the option to make minimum monthly payments on your balance. One thing that you should get right about credit charge off is that you are still accountable for paying off the balance.

Having a charge off on your credit report is undesirable for your business. You hence need to try and remove the charge off account from your credit report. However, it is essential that you first verify that the charge-off information is correct. Here, you should look at various things including;

· Checking the outstanding debt balance. Tell the creditor to correct or explain to you in case the debt is more than it is supposed to be.

· Ensure that only the most current collections account is listed as open. In case your account has been sold a few times, it should have zero balance and marked as closed.

· The charge off date is the date of your first delinquent payment on the original account. You should ensure that you verify the charge off date.

In conclusion, getting a credit charge off on your report hurts your credit score. However, all is not lost. You can rebuild your credit reputation by taking healthy credit steps such as having timely payments on all the other accounts and paying off the delinquent balance. As time goes, the charge off will be overshadowed by other positive information and have less impact on your business credit score. To avoid all this, ensure that you don’t take too much credit than you can pay back on time.