Credit Card Charge-Off – Not many people have heard of a charge off,but those who have are not very lucky if they got to know of it first hand via post.If you have every been intimated about denial of credit and that a “charge off” has been set against your credit card account,you probably have lost the ability to use the card since the past six months.
A charge off can seriously hurt your credit score and should be taken off your future credit reports as soon as possible.Not only will this affect your current line of credit,but it will put a dent in any subsequent loans,mortgages or credit cards you may wish to apply for.
Charge off vs written off
A write off on your credit card happens when even after several unsuccessful attempts at collection of unpaid dues there is no chance of recovery of those debts.In this case the card company writes off this credit card account and marks it as a loss.A write off is a red flag on your credit score and will be mentioned on your credit report when it is sent to the credit bureaus.
A charge off on the other hand is when after 180 days of receiving your last statement there was no payment made towards reducing the balance.This charge off also negates a few points on the users credit score but as long as there is some promise to clear the outstanding debt,it is not written off and only a temporary suspension of the cards usage will occur.
Does a charge off affect your credit score
A Charge off is essentially a negative entry on your credit report and will reflect in the credit report for the next seven years.This is a possible deterrent to future creditors and lenders that may want to give you a line of credit or a loan.
How do you recover from a charge off
After 6 months of unpaid dues,there is a good chance that a whole lot of late fees,accumulated finance charges and other penalties have been also added to your balance which has further increased the debt.In many cases that i have seen,this addition of charges over a period of time has also given rise to over limit fees.
A significant amount of debt now needs to be “settled”.In some cases the creditor will settle by asking only the principal amount to be paid and will waive off the finance charges and penalties.
AFter the final debt has been paid off the closed card,it will be marked as “charged off”.
The best way to recover quick from a charge off is to regularly pay off atleast the minimum due on each card,because that is barely 3% of the entire card balance.The only way in my opinion to settle a charge off is to negotiate a settlement that will be both beneficial to you as well as the card issuer.
- In most cases the charges and fees will be waived off.
- Also you need to ask for the finance charges to be waived off after the last statement that you had paid.
- If this still does not work,the you need to reach a figure that you can afford.This can be a flat $500 or $750 or whatever you feel comfortable paying.Remember that this may not be acceptable by the card company,but rather than write off your debts as a loss,they would go with your figure.