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There is always plenty of confusion with consumers about how to handle charge offs on your credit report. It is actually well known that charge-offs are regarded as derogatory credit but what exactly is the best way to take care of it? Should I pay off this bad debt? Should I not repay this bad debt?

Certainly the answer may shock an individual as for both questions is actually “yes”!

The term “charge-off” just refers to a debt that the lender was unable to collect. Often they will give up trying to collect the debt and refer the bad debt to a collection agency. Many times this makes it worse for the consumer as both the original lender and the collection agency can report the bad credit. This will make 2 negative marks on the credit for just one account.

A past charge-off could remain on your credit file for as many as 7 years. You are able to get an old charge-off removed from your credit file but a “paid charge off” is easier to remove than an “unpaid charge-off”. Even so an unpaid charge-off will drop off your record after 7 years but if you pay off the bad debt it’ll make it current again and start the 7-year cycle once again and the bad debt will remain on your credit for another 7 years beginning from the time you paid it off. It can be a catch-22 situation. You could have difficulties either way.

What is the obvious way to handle this situation? Well before you decide to pay off the old debt make certain you receive a statement in writing from the original debt owner and any debt collectors that states that once the debt is paid they will delete it from your credit report immediately. This technique is called a “pay for delete” which is the most effective way to settle an old charge-off.

Some people are not aware that they have the right to challenge bad credit shown on their credit file. The Fair Credit Reporting Act states that any consumer can dispute any derogatory credit on his or her credit report and this includes charge-offs, collection accounts, tax liens, judgments, repossessions and even bankruptcies and foreclosures. You are able to dispute these things and get them deleted on your own or you can hire an expert credit repair professional to assist you.

You may challenge items on your credit report by contacting the consumer reporting agencies which are reporting the bad credit. You are able to call them, write them and even contact them online, even so, the best way is to compose a formal letter so that you have a paper trail. Make certain that each agency receives the identical letter and make sure you retain copies with all documentation. They will have 30 days to investigate so make sure that you document the dates.

The credit companies are supposed to follow up with the original debt owners and any other interested parties. Also, they are required to search the public records on your accounts. Just be sure you contact them after the 30 days is up to make sure that they are working with you. Repairing credit can take some time but it is sure to take even longer if you’re not following up with your own requests.

Although you are able to repair your credit on your own a professional credit repair professional has developed the knowledge and expertise to expedite the process. Considering that an expert can do it quicker and easier it may be worth your time and effort to consult with them initial to determine whether they can help you.

It happens to be highly unlikely that you will not have a credit issue or two in your life time. For more information on credit repair letter check us out at our site!

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