Dear Driving for Dollars,
My husband helped my niece buy a car, and a couple of years later she stopped making payments. Two years ago, my husband contacted the company that had bought the debt and settled it. Now, we just noticed our credit report says the account is paid as agreed, but it also shows as a charge-off with two different account numbers.
Can we get the charge-off removed, or does it just have to run its course?
A charge-off listed on your credit report simply means the lender has reported the debt as a loss. This is done for the lender's tax purposes. Paying a charge-off doesn't get it removed from your credit report. It just lets future creditors know you've made good on that loan. It remains on your credit report for seven years plus 180 days, calculated from the first nonpayment.
A paid charge-off should read as "paid charge-off" or "settled charge-off" on your credit report. If your credit report is just displaying "charge-off" alone, you should definitely contact the lender. Explain the situation and the settlement and have backup documentation available.
First, see if they will remove it entirely, since the "paid as agreed" is already on the report. This is the best option for your credit score. If they won't remove the charge-off, they should change it to "paid" or "settled," assuming you did indeed fully settle. It will remain on your credit report until the seven years have passed.