What is a charge-off?

A charge-off on a credit report is a negative item that appears on an account when a creditor writes off an unpaid debt as a loss. When a borrower fails to make payments on a debt for several months, the lender may decide to charge off the debt and may close the account. Learn more below about what a charge-off is and how it may impact your credit.

A charge-off on your credit report

When a debt is charged off, it means that the creditor is no longer attempting to collect the unpaid balance and has written it off as a loss. If the charge-off has been reported to the credit reporting agencies, “Charge-off” will be listed as the status of the account. If the charge-off has been paid, the status of the account will indicate “Paid charge-off.”

A charge-off is not the same as an account in collections, though a charge-off can precede collections. A charge-off is essentially an accounting term that indicates the creditor doesn’t think they’ll be paid back the debt. Even though the creditor has written the debt off and has stopped attempting to collect the debt themselves, they may sell the debt to a collections agency, which may attempt to collect the debt.


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