Should I pay a charged off credit account?


Q. What can you do when an account have been charged off on your credit report? The company is still calling for payments. I’m trying to clean up my credit. Should I pay it or not?
— Debtor

A. A charge-off is when after many months of non-payment, a creditor writes off a debt as a loss.

But that doesn’t mean collectors won’t keep calling.

Usually the debt is sold or transferred to a debt or collection agency, said Bill Connington of Connington Wealth Management in Fairfield.

“Because it is considered one of the worst items on your credit report, paying a closed charge-off account may be a good idea,” Connington said. “It will not typically result in immediate improvement credit score.”

If the debt has been transferred, he said, you would make payments to the debt collector, which may offer a settlement to you. If you do decide to pay it off, it will show in your report as “paid collection” or “paid settled,” he said.

Charge-offs will stay on your credit report for seven years.

Rather than just pay, have a strategy first.

Contact the lender and say you’d like to pay the debt in full – in exchange for the lender telling the credit reporting companies to remove the item from your credit reports.

It’s a negotiating tool and not a sure thing, but it’s worth a try.

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This story was originally published pm May 2, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.