A charge-off is a term used by creditors when a borrower fails to make payments, and the debt is deemed uncollectible, essentially written off as a loss. This typically occurs when an account is seriously delinquent, usually after six months of non-payment. When a creditor charges off a debt, it doesn’t mean the debt disappears. Instead, the debt remains active, and the creditor may sell the account to a collection’s agency, which will continue to seek payment. Charge-offs are highly damaging to credit scores and stay on credit reports for up to seven years, significantly affecting the ability to qualify for new credit.

The credit repair process for charge-offs involves negotiating with the original creditor or the collection agency that took over the account. In some cases, it’s possible to reach a settlement where the creditor agrees to mark the debt as “paid” or “settled” on the credit report, which is more favorable than a straightforward charge-off. Additionally, identifying errors in the report, such as accounts that have been paid but are still marked as charged off, can result in significant improvements to the credit score.