How to Remove a Charge-Off Without Paying

Managing your credit score is all about responsible debt usage and making on-time payments. If you fall behind on the latter, you may find yourself in a financial struggle.

The pain points from late payments can range from late fees to negative information — like late payment marks or charge-offs — on your credit report.

Charge-offs are among the more substantial dings you can have on your credit report and can quickly lead to bad credit. If you’ve received a charge-off, you might be wondering how to remove a charge-off without paying anything. Below, we’ll explain what a charge-off is and if it’s possible to remove one without paying.

What is a charge-off?

A charge-off is when you’ve become so late on repaying a debt — typically 90 to 180 days late — that the creditor or lender has written the debt off as a loss for tax purposes. This is generally when the original creditor will assign or sell your outstanding debt to a third-party debt collector.

At this point, the debt collector owns your full debt and can take actions to collect the full amount — even if the collection agency bought the debt for pennies on the dollar. These collection actions can include phone calls, letters and even a civil lawsuit.

Charge-offs will show on your credit report as collection accounts. Plus, you still have the initial credit score reduction from the late payments that caused the charge-off. These can snowball into some significant negative impacts on your credit score.

How to remove a charge-off without paying

Other than simply waiting up to seven years for the charge-off to no longer show on your credit report, there is only one way to legitimately remove a charge-off without paying, and that’s through a dispute. 

If you find a charged-off debt on your account that you don’t recognize or you feel there is an error in the details of the debt, the Fair Credit Reporting Act (FCRA) allows you to initiate a dispute through each of the three main credit bureaus where the charge-off appears.

Remember, a charge-off may not appear on all three credit bureaus, so don’t be alarmed if one or more doesn’t have the charge-off listed.

Initiating a dispute through Equifax

If you find an error in a charge-off on your Equifax credit report, here’s how to remove a charge-off without paying through the credit bureau’s online dispute system. Simply click the “Get Started” or “Submit a Dispute” button and follow the on-screen instructions to file your dispute.

Generally, you’ll see the dispute’s findings within 30 days, but you can check a dispute’s status by clicking the “Check a Status” button.

Initiating a dispute through Experian

Experian offers two ways to dispute a charge-off on your credit report, via mail or online.

Dispute via mail

If you choose to go the old-fashioned route and dispute via mail, you’ll need to collect all the information you can. 

Experian recommends gathering the following data:

• Your full name, with middle initial and suffix (e.g., Jr., Sr., III, etc.)

• Your date of birth

• Your Social Security number (SSN) or a note stating you have no SSN

• The past two years of addresses you’ve lived at

• A copy of a government-issued identification card (e.g., driver’s license, state ID card, etc.)

• A copy of a bill or financial statement, such as an electricity, water or other utility bill, or a bank or insurance statement, etc.

• An outline of each item on your report that you believe is inaccurate, the account number and why you feel the information is incorrect

Place your dispute letter in an envelope and mail it to Experian at P.O. Box 4500, Allen, TX, 75013. Within 30 days, the credit reporting agency will complete its research and update you with its findings. You can also check the dispute status online.

Dispute online

Disputing online is an easy and effective way to get the job done, and you can accomplish it in Experian’s online dispute center. Click the “Start a new dispute online” button and follow the on-screen prompts to sign in and dispute the charged-off account.

You can get updates on your dispute by signing into your Experian account.

Initiating a dispute through TransUnion

Wondering how to remove a charge-off without paying on your TransUnion credit report? 

TransUnion offers an online dispute page where you can initiate your dispute with relative ease. Simply click the “Start Dispute” button near the top of the page and follow the on-screen instructions to complete the dispute.

This system will request that you open a new TransUnion account, which you can do at no cost. You can then log in to the system to get updates on your dispute. If TransUnion validates your dispute, the debt will be updated appropriately. If not, you will still have the opportunity to upload your own 100-word statement to explain the debt.

What are my other options for a charged-off account?

In some cases, you simply can’t get the charged-off account wiped from your credit report without paying something. However, you can sometimes settle the charged-off account without paying in full by negotiating with the collection company.

Here’s how to handle this process.

Negotiate the settlement amount

The first step in the negotiation process is to nail down the settlement amount. Remember, there is a good chance the collection agency purchased the debt for a fraction of its face value, so they may settle for far less than you actually owe. And even if this is a captive collection agency — one that works directly with the original creditor instead of purchasing the debt — they are paid to collect as much as they can.

Start by offering the collection agency a small portion of the face value that you feel comfortable offering as a lump sum — maybe that’s 30% of the value. The agency will likely counter with a higher amount that you can either accept or counteroffer. Continue negotiating until you reach a lump-sum settlement you’re comfortable with.

In some cases, though, the collection agency may be bound by specific rules and have only fixed settlements it can offer. Review these offers and choose the one that suits you well. 

Sometimes, a lump-sum settlement isn’t in the cards due to financial constraints. In this case, you can still negotiate a settlement amount, then request payment arrangements on the past due balance. Some collection agencies will permit you to make payments on a partial settlement, though some may only offer this if you agree to pay in full.

Negotiate a pay-for-delete arrangement

Once you pay off a collection account, that paid charge-off account will remain on your credit report — albeit with a $0 balance — for up to seven years. That said, over time, the impact that collection account has on your FICO credit score will decrease.

Plus, a $0 collection account will be easier to explain to an underwriter than an unpaid charge-off when applying for a home or a business or auto loan from future lenders.

Some debt collection agencies will agree to a pay-for-delete arrangement, which means it will stop reporting the negative account to the credit bureaus as soon as you pay it off within the agreed-upon time frame. This is not a common practice — especially if you agree to a payment plan — but it’s worth asking because it’s a quick credit-score fix.

Keep in mind, even if the collection agency deletes the collection account, you’ll still have the negative payment history from the original lender to deal with on your credit report.

If the collection agency agrees to the deletion, follow up on the promise by periodically pulling a complimentary credit report and looking for the collection account. You can pull your credit history at no cost from sites like Credit Karma or Credit Sesame. You can also get a complimentary credit report once per year from all three credit bureaus at AnnualCreditReport.com.

Start rebuilding by getting charge-offs deleted

If you have charge-offs on your credit report, it can create potential roadblocks when trying to get approved for a loan or credit card. However, you can start on the path toward rebuilding your credit by disputing any illegitimate charge-offs and paying off any legitimate ones via a debt settlement.

While paying them off won’t immediately fix your credit score problems — unless you negotiate a pay-for-delete offer — their impact will wane with time, and a credit underwriter will better understand a $0 balance collection account than one with a balance.

If you’re struggling with credit card debt, the Tally† credit card management app can help. Tally manages your credit card payments and even offers a lower-interest personal line of credit, so you can pay off higher-interest credit cards more efficiently. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. The APR (which is the same as your interest rate) will be between 7.90% and 29.99% per year and will be based on your credit history. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 to $300.