How You Can Remove Charge Offs From Your Credit Report
By: Matt Douglas
Charge offs are detrimental to a good credit score. They occur when an account becomes delinquent for 6 months.
To delete charge offs from your credit history you have to dispute the charge off. You can do this by sending a credit repair letter to the credit bureaus.
In your credit repair letter you should explain why the listing is incorrect. For example the account has never been paid late, it's not your account or information is wrong.
Unfortunately when it comes to reporting on your credit report you are guilty until proven innocent. Meaning it is common for incorrect information to be on your credit report.
Congress passed the Fair Credit Reporting Act in response to complaints of inaccurate information being reported by the credit bureaus. This legislation simply says that if a listing can not be verified then the credit bureau must remove it from your credit report.
It is also common for one charge off account to become many negative listings and ruin your credit score. Let me explain what happens to an account once it is charged off.
The delinquent debt is sold to a collection agency by the original lender. Then the collection agency tries to collect payment from you. If they can not then they will report a new negative listing on your credit report.
The collection agency will then sell your account to another collection agency. The new agency will also try and collect and if unable they will report yet another new negative listing.
This process can go on and on, depending upon how large the debt is. Thus you can see how one account can turn into many negative listings on your credit report.
If you get multiple negative listings your credit will be in bad shape. It will become extremely difficult to get approval for any new lines of credit.
When approval does happen you will be forced to pay exuberant interest rates or make a hefty down payment. This is how lenders penalize people when they are incapable of making their payments.
Unfortunately the system doesn't factor in that sometimes life just happens and some things are beyond our control. Often good people are faced with the choice of eating or paying a bill.
Credit bureaus have caused a false belief that when a charge off happens there is no recourse for the individual. That person will have to pay the high interest rates and large deposits for 7 or more years. This is not true.
As stated before The Fair Credit Reporting Act says that any unverifiable credit listing must be removed by the credit bureau. Typically lenders will not spend the money or time to verify an uncollectible debt.
Thus regardless of the veracity of the listing it is typically removed when an investigation occurs. However it is difficult to have the credit bureaus conduct an investigation.
This is because it costs the credit bureaus potential profits to investigate a listing. There is no money for the credit bureaus to earn from conducting an investigation and the only incentive is to comply with legislation.
So credit bureaus will often use stall tactics in an attempt to frustrate the individual into giving up on the dispute process. There is a belief that credit bureaus are government agencies.
This could not be farther from the truth. Credit bureaus are for profit companies. Equifax and Experian are both traded on the public stock exchange.
In 2006 Equifax reported revenue of $1.6 billion and Experian reported $3.1 billion. Transunion is a private company but experts estimate that they earned $1.2 billion in 2006.
As you can see these are huge companies and they have no problem with people believing that they are government agencies. The truth is that the government has passed legislation to protect our rights with these companies.
The Fair Credit Reporting Act was first passed in the early 1970’s. However this piece of legislation is not thoroughly enforced. If you have tried to remove a listing from your credit report yourself you can understand the difficulty in one person going up against such large companies.
Some people have found it beneficial to hire a professional credit repair firm to repair their credit. This is because professional firms can file a lawsuit against a credit bureau for not being compliant with the Fair Credit Reporting Act.
Whichever path you choose to do it yourself or hire a professional firm you can repair your credit history. You do not have to be saddled with the high cost of a mistake you made in the past.
To learn more about how to remove charge offs or for a free sample dispute letter visit us.
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