There are different types of debt but when you have a charged off debt on your credit card report, it is not a good track for the debtor. This can be a confusing term for the one who is using the credit. The term is not very common but it often shows that the one who has granted the credit has written off the money to be received as a bad debt. This happens when a minimum amount is also not paid off for a considerable time period. The creditor feels that he will be unable to get the amount and shows this account as a loss.
Status changed for tax purpose
When an account is shown as a Charge off account, it means it has passed its due date for a significant number of times. The missed payment that is due mostly for more than 180 days show that there has been no recovery on the account and the account is often removed from being in active status to the charged off or “bad debt” status. This shows on the credit report and it gives a negative score for the debtor. The lender makes this as an accounting action so that they can show this on their tax papers as a loss.
Seven years’ time period
Now you may have this question that how long this negative marking of charged off shall be shown on your report on credit ratings? It is generally believed that it shall be there for seven years. This has a lot of impact on the credit scores as this point is good enough for any organization to decline your loan application. This item in not at all helpful for any credit history and it is also difficult to remove this from there. Often you would like to think of ways to remove this negative entity from your history before the mark of seven years.
Paying off the charge
There are options where you can always pay off this item that shows your debt as a bad debt! When you pay it off, it helps improving the credit scores to some extent. At the same time you should know that this item being there on your credit report once will damage your score for a long time to come. The direct impact will grey down with time but creditors will not feel confident as long as they find there was this charge in your credit report.
If the credit report starts showing this new status recently, then you can pay off the charge on condition that it is deleted from your credit history completely. If your report keeps showing this charge, then you will have to clear it off before applying or qualifying for any home loan. When this report had been showing this Charge off for some time, then you can negotiate with the creditor and make a partial payment and settle off the debt. The only thing is to verify first that the payment is actually for your account and also that the amount mentioned is right. Now pay off the amount and then start getting back to the proper credit ratings so in future you can qualify for any types of loans.