Daniel Rosen (Credit Repair Business Secrets) explains what charge-offs are, why they damage credit, and three practical methods to remove them from credit reports: (1) Round One dispute letters to credit bureaus requesting verification (bureaus must respond in 30 days or delete unverified items); (2) validation/reinvestigation actions directed at the original creditor or debt collector (including invoking Section 312/FACTA validation and filing complaints or consulting an FCRA attorney if stalled); and (3) pay-for-delete negotiations with creditors or collectors in exchange for payment. He also covers timelines (charge-offs often occur after 120–180 days delinquent and remain on reports for seven years), score impact (often a 50–150 point drop), and related calls-to-action (download dispute letter templates at creditrepaircloud.com, file complaints with CFPB/FTC/state AG, consider Credit Repair Cloud and the Credit Hero Challenge).
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Hey credit heroes. Charge offs are one of the most unpredictable and damaging items that appear on a credit report. So today I'm going to share three fast removal methods and give you the best tools to get the job done. So you better stick around. My name is Daniel Rosen and welcome to Credit Repair Business Secrets. Charge offs are one of the most unpredictable and harmful items that appear on a credit report. They damage your relationship with lenders, they make it difficult to get approved for lines of credit, and the impact of a charge off depends entirely on your overall credit history, your payment history and additional personal factors. So there isn't just one foolproof process to remove them, but there are three methods that do work consistently and all they require are patience, persistence, pressure and the right dispute letters to get the job done. Here's how this relates to us for anyone new to credit repair. A charge off is a financial term used to describe a debt that a lender has given up trying to collect. Charge offs typically happen when a borrower fails to make payments for an extended period of time, between 120 and 180 days. But charge offs also happen even if payments were being made. For example, if the payment just didn't meet the monthly minimum and the account became delinquent, or if the borrower files for bankruptcy. Charge offs are long term problems. They live on credit reports for seven years from the date of the first missed or late payment on the account. Their impact varies wildly depending on the circumstance, but just one charge off can drop a score anywhere from 50 to 150 points, making them one of the most unpredictable and dangerous items in all of credit repair. Considering the charge offs give your payment history a black eye contact, hurt your credit utilization, and force you to deal with debt collectors. Credit heroes need to treat their removal as one of the most important things to focus on. Here's the thing to remember when a charge off happens, the lender writes off the debt as a loss on their financial statements. Sometimes they attempt to collect the debt themselves, but usually they sell it to third party debt collectors for pennies on the dollar, or they lease that debt to a debt collection firm. But no matter who owns the debt, you still have the obligation to repay even if the original creditor is no longer involved. You owe whoever acquired that debt even if you remove it from your credit report. So it's important to remember that technically you still owe that debt and they can sue you for it. Now, if you pay off the debt tied to the account before the seven year clock is up, it's going to show as a paid charge off on your credit report. Paying off the account might help to improve your scores, or it might make lenders more likely to approve you for credit in the future. But that's not guaranteed. From a credit scoring perspective, what matters most is how recently the charge off happened and if it was recent. Removing that charge off from your credit report is a high priority, no matter what the repayment status is. Here's why this is important. Your creditor is paying taxes on the debt that you owe. Your debt is an asset to their company, so when you don't pay, they lose money. And when they're forced to hang on to the debt, they lose even more money. This is why in many cases, creditors are willing to negotiate a settlement on a charge off debt because it's in their best interest to receive some payment rather than none at all. Here's what you need to know. It's best to avoid charge offs whenever possible, but if you're stuck with them, here are three removal methods that work, and all it takes is patience, persistence and pressure and the right dispute letters to get the job done. The first method sends standard dispute letters directly to the credit bureaus requesting verification of the debt and the removal of any unverified items or factual errors from the credit report. We call these first letters Round one. Regardless of the type of account, the bureaus are required to contact that furnisher that reported your information and verify the debt. After contacting the furnishers, they only have 30 days to respond. If they don't respond in time, the items you disputed are deleted automatically. Ba boom. The second method? Challenge the charge off with the original creditor using section 312 of the Fair and Accurate Credit Transaction Act. Or send a validation letter to the debt collector directly requesting that they prove that the debt is accurate. If the bureau's or debt collectors do not respond appropriately, or if they respond with a stall letter, you may need to request a reinvestigation demand to know their method of verification or send them a warning letter if necessary. If you don't have the Round one validation, reinvestigation method of verification and warning letters that I'm talking about, you can download them all for free at creditrepaircloud.com dispute letter templates I'll also put the link over there in the Show Notes. Now this process, it does take time. But if you've done all this and you still don't have the result that you want, you may want to file a complaint with the cfpb, the FTC, or your state attorney general or consider bringing in an FCRA attorney to advise you further. Now, if the debt is verified and validated, you're really left with only one option. The third method Offer the lender or debt collector a pay per delete. Negotiate to have the charge off removed from your credit report in exchange for paying off the debt. You can try to offer partial settlement in return for the deletion of the account, but most debt collectors will want the full payment. This method tends to be successful because it's a win win situation for you and the creditor. Your debt is paid and charge off is deleted. Just make sure you get proof of the agreement in writing before moving forward. Here's my final point. Charge offs are unpredictable, damaging, and a pain to remove from credit reports. But don't let that discourage you. Patience, persistence, pressure and the right dispute letters will get the job done. And I'll end by saying if you don't already have a credit repair cloud account, check it out. It's the software that most credit repair businesses in America run on. Just sign up for a 30 day free trial at creditrepaircloud.com freetrial and if you'd like to change lives and grow your own credit repair business, check out our Credit Hero Challenge. It's a live experience that has helped tons of credit heroes to get certified in disputing and to gain confidence as they run their credit repair business on a solid foundation so they can change a lot of lives and make a great living in the process. We're starting the next challenge very soon, so you want to join before the doors close or you're going to have a long wait until the next one. So sign up right now@creditherochallenge.com if you're finding value in the things that I share on this podcast, click below to subscribe and follow. Also, give me a five star review, give me a thumbs up or share the show and help me to change more lives. If you'd like to read the show notes, they're posted on my blog. If you have a question or a comment, drop it down below because I read each and every one of them. I would love to hear from you and I'll respond as soon as I can. If you want to learn more about removing collections from credit reports, check out my episode Proven Tactics for Deleting Collections. So take care Credit Hero and keep changing lives.
