ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Managing Credit Cards & Payment Options

5 Quick Questions When It Pertains to Charge-Offs…

Updated on May 27, 2016

Understanding all the inner-workings of a credit report can get a bit overwhelming sometimes. Ever heard of a charge-off account? At first notice a charge off account sounds like something that could be considered positive, as if implying that a balance has been completely canceled, removed, or paid off. In all financial realism, the concept of a charge-off is actually quite egregious in nature, delving from the stand point that whenever an account is charged-off by a creditor, it is then written-off to profit and loss by a creditor from an accounting stand point. In a nutshell, here’s the deal about charge-offs: They can literally wreak havoc to consumers with good credit scores, but can mean even worst disaster to those with great FICOs. Financial questions abound. Below are five such questions you should be asking yourself about charge-offs:

#1 Exactly What Is A Charge-off?

So what’s a charge-off? Actually the word has two meanings: First, charge-offs from the stand point of the creditor simply means a certain amount of debt (be it a revolving or installment account) is unlikely to be collected; therefore, it has been written-off to profit and loss. Second, profit and loss is an accounting term, and simply means the original creditor has written off the debt on its taxes. In essences, when an account has been written-off to profit and loss, the account has been effectively bought by US government.

#2 How Does It Happen?

A charge-off is the result of some kind of inaction in time—that is, to say, over a period of time most debt are charged off at the 180 day period mark. So, what a charge-off represents to a consumer is simply a series of events of lack of payment. Perhaps you fell behind on your credit card for reasons unknown to many. One thing, however, is for certain: A charge-off is the real deal when it comes to credit repair, as the credit mark can mean a great deal of damage to those trying to restore his or her credit back to normal standards (As a side note: Debts can be charged-off even if payments have been made, providing that all of the payments were below the account’s monthly minimum).

#3 Am I still Liable for this Debt?

The answer to this question is a resounding yes; and here’s why: Most of the times when a debt has been charged off by a creditor, it then gets sold to a third party debt collection agency. This collection account now has the legal right to force you to make good on paying the debt...and they will indeed do this until you do one of two things: 1) Pay the debt off in full; or better yet 2) Discharge the debt in Chapter 7 bankruptcy. Still further, creditors still retain the right to collect the full amount of the debt and have a variety of options available to them to do so.

#4 How Does It Affect My FICOs?

Ideally, a credit report with very high FICOs should reflect an image of pristine personal financial behavior. On the other hand, consumers with a great number of charge-offs confer an image of abject irresponsibility. Why is this so? It’s simple: From the stand point of FICO’s scoring model, at least, a credit report that has a vast number of charge-offs on it says two things: 1) Not only have you been reluctant to pay your bills on time each month, but; 2) You failed to do so for a 180 day period, which is the time period that an account has before it officially charges off. So the impact to your FICOs can be quite devastating to say the least.

#5 What Can Be Done About It?

Alas, getting a charge-off removed from your credit report (at least in the early stages) isn’t something left for the novice credit repairer; and quite frankly, can be an insurmountable task even for a seasoned credit repair expert. The reason is simple: A charge-off denotes the fact that you were quite irresponsible at one point, and rightfully should be punished by FICO’s scoring model. To put it more concretely, the only thing that can be done at this particular juncture is to offset this bad behavior with some kind of good behavior, such as paying off the charge-off balance in full, keeping your credit utilization below 30%, or better yet, applying for better quality credit cards.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: ""

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized. (Privacy Policy)
    CloudflareThis is used to quickly and efficiently deliver files such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisements has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)