When you fall behind on payments for a loan or credit card, your lender might eventually give up trying to collect the money. At this point, they may declare the debt a “charge off.” A charged-off debt is one that the lender considers unlikely to be repaid. This doesn't mean you no longer owe the money. In fact, the opposite is true; you still have to pay, and the charge off will appear on your credit report for years. Addressing a charged-off account early can protect your financial future and improve long-term opportunities.
Understanding what it means to have a charged-off account is important. It can affect your ability to borrow money, rent an apartment, or even get a job. In this guide, we’ll explain what a charge off is, what happens when an account is charged off, and how it can impact your credit. If you have multiple outstanding debts, one charge off can worsen your overall financial picture.
If you stop making payments on a credit card or loan for a long period, usually around 180 days, the lender may mark your account as a charge off. On your credit report, this shows up as a negative entry, usually with the words “Charged Off” next to the account name. Even after settlement, charge offs remain on your credit report for up to seven years.
This doesn’t mean your debt is forgiven. You are still legally responsible for the full amount you owe. The charge off is just an accounting term that tells the lender and others that they no longer expect to collect the debt directly. Lenders review your past performance with credit when deciding whether to approve new applications.
Many people confuse a charge off with being sent to collections. These can happen at the same time or separately. After charging off your debt, the lender may sell it to a collection agency. This new company will try to collect from you instead. Old debt that is charged off can still affect your credit rating and borrowing potential.
If this happens, your credit report will likely show both the original charged-off account and a new collections account. That means double the damage to your credit history and score. Payment history plays a major role in your credit score, and charge offs represent serious disruptions.
Learn more about Debt Collection from the CFPB.
Once your account is charged off, the lender may:
Even if your debt is charged off, you can still try to settle it. Sometimes, you can negotiate with the creditor or collector to settle for less than the full balance. If you do this, the status on your credit report may change to “Charge Off Settled” or “Charge Off Paid.” Once paid or settled, your credit report may reflect the updated charge off status, though the negative mark stays.
A credit card charge off works the same way as any other kind of charge off. If you fall too far behind on payments, your credit card company may close your account and list the unpaid balance as a charge off. A credit report indicating multiple delinquencies or charge offs can severely limit your options.
This will likely:
For tips on managing credit cards and avoiding these issues, see ’s guide to credit card basics. A paid charge off is still considered negative but may look better than an unpaid one to future lenders.
A charge off is one of the most damaging things that can appear on your credit report. It shows that you failed to pay a debt as agreed. Lenders and bureaus see this as a major sign of risk. A charge off means the creditor has written off the debt for accounting purposes, not that it’s forgiven.
Charge offs can:
Even one charge off can make a big difference, especially if your credit history is short. Charge offs often lead to aggressive debt collection by third-party agencies.
A charge off can stay on your credit report for seven years, starting from the date of the first missed payment that led to the charge off. That’s a long time to deal with the impact of a single account. Your credit report might list both the original creditor and the collection agency involved.
The entry may update during that time, especially if you:
If you're unsure about how long something will remain on your report, you can check your report for free at , the only official site authorized by federal law. Charge offs can derail your personal finance goals and increase financial stress.
In most cases, you can’t just erase a charge off. However, you might be able to: A charge off generally signals to other lenders that the account was not paid as agreed.
Learn more about disputing credit report errors in our guide to credit disputes.
Remember that correcting your credit report is best done yourself, not through credit repair firms. Read the FTC's warning about credit repair scams, and if you need help from a third party, use a nonprofit-provided credit report review rather than credit repair.
One of the easiest ways to avoid charge offs is to set up automatic payments. When your bills are paid automatically, you’re less likely to forget a due date or miss a minimum payment.
You can set up auto-pay through:
Make sure you always have enough money in your account to cover the payment. Otherwise, you could get hit with overdraft fees or returned payments.
If your debt has been charged off, that doesn’t mean you’re out of options, or out of rights. Debt collectors must follow specific laws when they contact you about a charged-off account. These rules are laid out in the Fair Debt Collection Practices Act (FDCPA) and enforced by the Federal Trade Commission (FTC).
Here are a few rights you should know:
A charged-off account is not the same as a closed account. Accounts can be closed for many reasons, including inactivity or at the consumer’s request. Closed accounts do not harm your credit score unless they carry a balance.
Charged-off accounts, on the other hand:
If you apply for new credit while you have a charge off on your report, lenders may see you as high-risk. This makes it harder to:
While one late payment might hurt your score a little, a charge off causes lasting damage. Here’s how:
If you want to clear up a charged-off debt, you have a few options:
1. Pay in full: This satisfies the debt but won’t remove the charge-off label.
2. Set up a payment plan: Some creditors or collection agencies will work with you to pay over time.
3. Settle the debt: You might negotiate to pay less than the total owed in exchange for closing the account.
Make sure to get any agreement in writing and keep a copy for your records. This can protect you from future collection attempts on the same debt.
Most credit card companies will charge off a debt after six months (about 180 days) of missed payments. That’s why it’s so important to address credit card debt early.
Steps to take before it gets to that point:
Once a credit card charge off occurs, you’re not just dealing with lost access to your credit line; you’re also dealing with a long-term mark on your report.
As mentioned above, automatic payments can help you avoid missed payments that lead to charge offs. But automation works best when paired with responsible money habits.
Here are tips for success:
Yes. Though 180 days is common, some lenders may charge off debt sooner if:
Even if a charge off happens sooner, the damage to your credit score remains the same.
A charge off will stay on your credit report for seven years from the date of first delinquency. That means the timer starts when you first missed a payment, not when the account was officially charged off.
During this time, it can:
If you're overwhelmed by multiple charged-off accounts or mounting unpaid debt, consider seeking help through a debt management plan. These programs, often offered by nonprofit credit counseling agencies like Credit.org, help you:
To learn more, explore our debt management solutions.
A charge off isn’t the end of the world, but it is a sign to take action. Letting unpaid debt linger can only make matters worse.
Even if you're not able to pay right away, consider calling your lender, getting advice from a certified credit counselor, or setting up a plan that fits your financial goals.
