Having a loan charged off can effect your credit score in a negative way. It will make it harder for you to get a loan in the future, and it's difficult to get it removed from your credit report.
Definition
A charge-off occurs when a company believes you will not continue paying your debt because you haven't made payments for a specified period of time. It writes off your loan as uncollectible.
Time Frame
A lender can only charge off a debt after it has been past due for a long time, usually at least a few months. This time frame varies by lender, though.
Ramifications
If a loan company charges off your debt, it will be reported to the credit bureaus and go on your credit report. This can have a negative effect on your ability to get another loan and will drop your credit score. It will stay on your credit report for seven years.
Collections
After a lender charges off a debt, they may opt to send it to a collection agency. You may receive calls from someone trying to collect on the debt. If you pay it, it may be marked as paid, and you may be able to negotiate with the original lender to remove it from your report, but the lender is not required to do so.
Prevention
Try to work with your lender to make payment arrangements if you can't make a payment or you know you will pay late.
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