How Many Times Can A Creditor Report A Charge-Off?

A charge-off can have a major impact on your credit scores and creditworthiness. If you have a charged-off account on your credit reports you may be wondering how many times the creditor can continue reporting it. Here’s what you need to know

What is a Charge-Off?

A charge-off occurs when a creditor writes off a delinquent account as a loss after several months of non-payment. It typically happens after an account is 180 days past due. When an account gets charged off, the balance due is removed from the creditor’s books as an asset and is recorded as a loss.

Even though the creditor loses the money, the debt is still legally owed by the consumer. The creditor can continue to try to collect the debt or sell it to a collection agency. A charge-off will appear on your credit reports and can significantly damage your credit scores.

How Long Can A Charge-Off Be Reported?

Under the Fair Credit Reporting Act (FCRA) charge-offs can remain on your credit report for up to 7 years from the date of your first delinquency leading up to the charge-off. This is called the date of first delinquency.

For example:

• You miss your January payment on January 30th
• Your account becomes 30 days past due
• You continue missing payments over several months
• Your account gets charged-off in July
• The 7-year reporting period begins from January (date of first delinquency)

So this charge-off could remain on your credit reports until January 20XX, up to 7 years from the first missed payment.

Monthly Reporting of Charge-Off Status

The creditor or debt collector can continue to report the charge-off status every month even after the initial charge-off. They are within their rights to report it monthly until it falls off your credit reports at the 7-year mark.

The monthly updates keep the charge-off status active and can maintain its negative impact on your credit scores. Even though the original charge-off date does not change, the ongoing monthly updates can be frustrating for consumers trying to rebuild credit.

Strategies to Handle Charge-Offs

If you have charge-offs dragging down your credit, here are some tips to mitigate the damage:

• Pay charge-offs in full – Paying a charge-off entirely can sometimes get it removed from your credit reports. However, creditors are not obligated to delete paid charge-offs.

• Negotiate pay-for-delete – Offer to pay a charge-off in exchange for the creditor agreeing in writing to delete it from your credit reports. This can help remove charge-offs earlier than 7 years.

• Wait it out – Charge-offs fall off your reports after 7 years. As this date gets closer, the impact on your scores tends to decrease.

• Dispute errors – Make sure your charge-offs are reporting accurately regarding dates and balances. Dispute any errors with the credit bureaus.

• Improve other credit factors – Pay all your other accounts on time and keep balances low. Having positive credit activity can offset the damage of charge-offs.

The Bottom Line

It’s frustrating, but creditors can continue updating charge-offs monthly until they naturally age off your credit reports after 7 years. However, charge-offs become less detrimental to your scores as they get older. A proactive credit repair strategy can help minimize charge-off damage and rebuild your credit over time.