Charge Off vs Write Off: Is There A Difference?

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A charge-off or write off occurs when a debt has become severely delinquent. This would occur if a creditor has not received any payment towards the debt for over 180 days. These terms are considered final status indicators for the account,  meaning the account is no longer an active entry on your credit report.  

Charge-Off vs. Write-Off: You Need To Know The Difference

The derogatory remarks “charge off” and “write off” are considered interchangeable terms  as they  both apply to delinquent debts.  A charged off or written off debt is therefore, a debt that has become seriously delinquent with no prospect of payment being made by the debtor.

Each institution will have its own methodology and requirements to consider a debt uncollectible, the general time frame is considered 6 months (180 days) of non-payment on a debt. The creditors will charge off or write off the account for tax purposes and then in most cases sell the debt to collection agencies.

Does A Charge-Off Affect Your Credit?

Yes, once a charge off or write off appears on your credit report it will severely impact your credit score and in most cases remain on your credit report for 7 years before it is removed. This will affect your ability to obtain:

  • Loans with favourable interest.
  • Auto loans.
  • Mortgages.
  • Rental agreements.
  • Approval of loans.

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Could Your Negative Items (Like Charge Offs) Be Reported Inaccurately?

Yes, it has been noted by the Federal Trade Commission (FTC – federal institution regulating debt collection and reporting) that 1 in 5 reports contain at least one disputable error. This suggests disputing charge offs or write offs should be considered as a means of removing  them from your credit report.

Successfully disputing the derogatory remark will afford several benefits for your financial health, including:

  • Lower interest rates across all lending options.
  • Easy approval for loans.
  • Mortgage loan approval more likely.
  • Auto loan approach more likely.

Bottom Line

Whether the term being used is “charged off” or “written off”, if it appears on your credit report it will wreak havoc on your credit score. You should consult a credit repair specialist like Credit Sage to help mitigate any further damage to your credit report and set you on the path to obtaining your best possible credit score today.

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