How often do you check your credit report? It’s good practice to pay close attention to the details on your report such as your activity, history, and the status of your accounts. You also want to be mindful of any items that show up as charged off.
What Does Charged Off Mean?
A charged off item is a delinquent account that has been taken off the creditor’s books. Basically, it occurs when you have an outstanding debt on your credit card, auto loan, personal loan, or student debt that a creditor has given up trying to collect.
Your debt was originally an asset to your creditor, but the lender might consider it to be charged off as a loss if it goes unpaid for too long.
How Does It Affect Your Credit?
A charged off account can impact your credit score and may stay on a credit report for up to seven years. If you have a previous debt that was charged off, its status won’t change even if you start making payments on that debt. You’ll have to wait it out until the item drops from your credit report.
In the meantime, there are things you can do to help your future credit score. By making timely payments on your other debts, you’ll add positive information to your credit report that will help you shine more. That should lift your score over time.
When Your Credit Will Improve
About two years after an account is charged off, you should start to see your credit score move in the right direction. And if you’re still making other debt payments on time, this will help add positive information to your credit report each month, which can improve your credit even faster.
Check out this article on credit scores and rising credit balances or this guide on credit scores for tips to help improve your credit score.
How To Get Your Credit Report
If you haven’t seen your credit report recently, you can request a copy from one of the three credit-reporting agencies: Equifax, Experian or TransUnion. The federal government mandates that they must provide you with one free copy of your credit report every year.
More recently, the three credit-reporting agencies announced that they have voluntarily decided to allow people to check their credit report for free on a weekly basis.
You can call or write to any of the three agencies to request your free credit report, or you can request one at www.annualcreditreport.com.
Where To Get Your Credit Score
Details from your credit report typically are used to determine your credit score. So, it’s also good practice to keep a close eye on your score as well. A higher score is more appealing to lenders.
You can find your FICO credit score online at www.myfico.com. You typically have to pay to get your score, but you might be able to get the fee waived with a free trial to another FICO program.
In addition, many other financial service providers — ranging from credit card lenders to banks — allow customers to see their score for free as a perk.
Equifax, Experian or TransUnion can also provide you with access to a VantageScore credit score, but it’s not typically free to do so.
Bouncing Back From Debt
Managing debt can be stressful, and it might feel like a never-ending battle. If you are under a load of debt and wonder how to work through it, SmartSpending can help you turn things around.
Our debt advisors can help you reduce or pay off your debt — for much less than you owe — in as little as 24 to 48 months.
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