How to Repair Credit Charge-Offs

A charge-off is a negative entry on your credit report, indicating that you defaulted on a credit agreement. After about six months of missed payments, creditors typically will close your account and list it internally as a write-off for tax purposes. You remain responsible for the debt, and the charge-off is listed on your credit report. Charge-offs hurt your credit score and can make it difficult to be approved for new credit. The Federal Trade Commission reports that charge-offs will remain on your credit report for seven years, and cannot be removed sooner unless the information is wrong. The only remedy is to pay the charged-off debt and move on.

Instructions

1

Order a free copy of your credit report and score from Annual Credit Report . According to the Federal Trade Commission, the website is the only site authorized by the U.S. government to offer free reports under the terms of the Fair Credit Reporting Act. You're entitled to three free credit reports every 12 months -- one from each of the major credit bureaus.

2

Review your credit report to find accounts that have been listed as charged-off.

3

Call the creditors or debt collectors for the charged-off accounts. Find their names and contact information listed on your credit report with the charge-off. Make arrangements to pay the balance due in full through a lump-sum or installments. Or offer to pay less than the full balance through a process called debt settlement. The SmartMoney website reports that creditors and debt collectors will sometimes settle for 20 to 75 percent of the balance.

4

Get the terms of any agreement in writing. The terms should include the amount you have agreed to pay, due dates and a stipulation that your credit report be updated to show the charge-off as a "paid charge-off."

5

Order a new copy of your credit report about 60 days after you complete payment of the charge-off. Confirm that your credit report was properly updated.