A charge-off reporting on your credit reports is going to cause substantial negative issues to your credit scores.
Your first reflex may be to settle the debt for less than the full balance and that may be a good place to start.
Paying off a charged-off account could actually lower your credit scores. As previously stated, the last 6 months of payment history impact your credit scores more than anything, Paying off a charged-off account that hasn’t reported activity in a few years will lower the balance to $0 (which is a good thing) and change the status from Charged-off to Settled/Paid (another good thing) but, the account will re-report new activity which may lower your credit scores for the short term.
This is also why disputing a charged-off account may actually cause more bad than good.
Sometimes a direct creditor intervention or a document request accomplishes everything a dispute does, if not more, without any negative side-effects.
The way that you should address a charge-off will depend on what your short and long terms goals are and the activity that the account is reporting.
On top of everything, if the debt is past the statute of limitations, settling the debt may be a waste of money.
You should also try to be proactive and work on the charged-off account but, it’s important to work smart and prioritize your actions based on your goals.
CreditFirm.net has helped thousands of clients improve their credit scores and remove charged-off accounts from their credit reports.
If you have a charge-off on your credit reports contact CreditFirm.net to find out how we can help fix your credit and improve your credit scores.