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This you may not want to see on your credit report

January 7, 2015 by · Leave a Comment 

Your credit report is a snap shot of your finances. It reveals information about you and your finances to lenders and others who are looking into your financial information for many reasons. FICO score is just one barometer and your credit report carries more information than that. Here is something that you never want to see on your credit report.

Charge-offs usually takes place if you fail to pay several installments or stop payments completely on a debt you owe. After several months of non-payment, usually after missing six payments, your creditor may take an action known as charging-off the debt. It allows the creditor to write-off the debt for tax and accounting purposes and cut down their losses. However, you are not off the hook. Instead their action goes on your credit report as a charge-off and could stay on your credit report for considerable period of time impacting your finances.

One way to deal with the situation is to negotiate with the debtor and pay-off the total amount you owe or an amount you agree with them. But the bad mark may still be there. If you pay your other debt on-time without any other bad marks on your credit report, lenders may consider that for any future requests for credit.

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