A charge-off can drop your score 50–150 points and stay 7 years. Here's what happened to your debt and exactly what to do next.
When you stop paying a credit card, loan, or other debt, the creditor waits. After 120–180 days of missed payments, the creditor "charges off" the account — meaning they declare it a business loss for accounting and tax purposes.
This is an accounting decision, not a legal forgiveness of debt. The original creditor may:
When a creditor charges off an account, they report it to the three major credit bureaus (Equifax, Experian, TransUnion). You'll typically see:
| Field | What You'll See |
|---|---|
| Account Status | "Charged Off" or "CO" |
| Payment Status | "Charge-off" or "Collection/Charge-off" |
| Balance | Amount owed at charge-off (may include fees) |
| Date of Status | Date the account was charged off |
| Date of First Delinquency | Critical — this starts the 7-year clock |
If the debt was sold to a collection agency, you may see two entries: one from the original creditor showing the charge-off, and one from the collection agency showing the same debt in collections. This is legal under the FCRA, but both entries will be removed 7 years from the original delinquency date.
| Starting Credit Score | Estimated Score Drop | New Score Range |
|---|---|---|
| 750+ (Exceptional) | -100 to -150 pts | 600–650 |
| 700–749 (Good) | -80 to -120 pts | 580–620 |
| 650–699 (Fair) | -50 to -80 pts | 570–620 |
| 600–649 (Poor) | -30 to -50 pts | 550–590 |
| Below 600 (Very Poor) | -10 to -30 pts | Minimal additional damage |
Seven years from the date of first delinquency — not the charge-off date, not the date you paid it off, not the date it was sold to collections.
The FCRA requires that everything on your credit report be 100% accurate. Common charge-off errors include:
File disputes directly with each bureau that shows the error: Equifax, Experian, TransUnion. Bureaus have 30 days to investigate.
Offer to pay the debt in exchange for complete deletion from your credit report. This is more effective with third-party debt collectors than original creditors.
Sample pay-for-delete offer:
"I am prepared to resolve account [#] for $[X] — a full settlement — in exchange for complete deletion of this account from all three credit bureau reports within 30 days of payment. Please confirm this agreement in writing before I submit payment."
Always get the agreement in writing before paying. Pay by check so you have a paper trail.
If the account is already paid, write to the original creditor requesting goodwill deletion as a courtesy. This works best if:
Address to the creditor's customer relations or executive office — not the collections department. Be honest, brief, and don't include legal threats.
If a third-party collection agency purchased the charged-off debt, you have FDCPA rights. Send a debt validation letter within 30 days of first contact to force them to prove they have the right to collect. If they can't validate, they must stop collection and may remove the entry.
→ Generate a free debt validation letter| Situation | Recommendation | Reason |
|---|---|---|
| Applying for mortgage within 2 years | Pay it | Most lenders require charge-offs resolved |
| Debt near statute of limitations | Consult first | Payment may reset SOL in some states |
| Debt is past 7 years old | Do not pay | It should be removed anyway; payment won't help |
| Debt is inaccurate | Dispute first | May get free removal without paying |
| Collection agency won't negotiate | Validate debt first | Forces them to prove they own it |
| Score recovery is long-term goal | Negotiate deletion | Paying without deletion provides minimal benefit |
The statute of limitations (SOL) is separate from the 7-year credit reporting period. It limits how long a creditor can sue you to collect. Once the SOL expires, the debt becomes "time-barred" — they can still try to collect but cannot win in court.
SOL periods vary by state and debt type (typically 3–10 years). Find yours: Statute of Limitations by State →
If a collection agency is pursuing a charged-off debt, you have 30 days to demand validation. Our free tool generates a customized FDCPA-compliant letter in under 2 minutes.
Generate Free Letter →No. A charge-off means the original creditor wrote the debt off as a business loss — but you still legally owe the money. The creditor may sell the debt to a collection agency, which then has the right to collect.
Seven years from the date of first delinquency — the date you first missed a payment that led to the charge-off. Paying or settling does NOT restart this clock.
Minimally. The charge-off entry changes from "unpaid" to "paid charge-off," which looks better to lenders reviewing your file manually, but the automatic score impact is small. Negotiating deletion before paying will do far more for your score.
Yes, until the statute of limitations expires. A charge-off does not end your legal liability. Original creditors or debt buyers can file suit to obtain a judgment, which allows wage garnishment, bank levies, and property liens.