A charge off is when your credit card issuer writes off your debt as a loss after you stop paying for 120 to 180 days

A charge off happens when your card issuer decides you are not going to pay what you owe and removes the balance from their active accounts. This does not erase the debt — you still legally owe the money — but it signals to the credit reporting system that the issuer has given up on collecting from you directly. The issuer typically charges off an account after six months of missed payments, though the exact timing varies by card company and state law.

The charge off itself appears on your credit report as a separate entry, separate from the missed payments that led to it. It stays on your report for seven years from the date of the first missed payment that started the delinquency cycle. During those seven years, the charge off will lower your credit score significantly and make it harder to get approved for new credit, better interest rates, or sometimes even rental housing or employment.

After a charge off, the issuer may sell your debt to a third-party debt collector or pursue collection efforts themselves. You can still be sued for the balance, and a judgment against you can lead to wage garnishment or bank levies depending on your state. The debt does not disappear because the issuer wrote it off their books.

Key Takeaways

  • A charge off occurs after roughly 120 to 180 days of missed payments and means the issuer has stopped trying to collect the debt themselves.
  • The charge off stays on your credit report for seven years from the date of the first missed payment, not from the charge off date itself.
  • You still owe the debt after a charge off, and the issuer or a debt collector can still sue you or sell the debt to another company.
  • A charge off damages your credit score more severely than missed payments alone because it signals the account is uncollectible.
  • Settling a charged-off debt with the issuer or collector may stop collection efforts but will not remove the charge off from your credit report.

How the charge off timeline works

The charge off does not happen on day one of a missed payment. Card issuers follow a standard progression. Your first missed payment triggers late fees and interest rate increases. After 30 days, the account is reported as 30 days late to the credit bureaus. At 60 days late, it is reported as 60 days late. At 90 days late, it is reported as 90 days late and the issuer may begin internal collection calls.

Between 120 and 180 days of missed payments, the issuer charges off the account. Most major issuers use 180 days (six months) as the standard, though some move faster. Once the charge off is recorded, the account status changes from "60 days late" or "90 days late" to "charged off." The credit bureaus are notified of this status change, and it appears as a separate negative mark on your report.

The seven-year reporting period starts from the date of the first missed payment, not from the charge off date. This means even after the charge off is removed from your report, you will have already had years of late payment history showing on your credit file. The charge off is simply the most severe version of that delinquency.

The difference between a charge off and a write-off

A write-off is an accounting term that means the issuer has removed the debt from their books as uncollectible. A charge off is the credit reporting term for the same event. They describe the same action from different angles — the issuer's accounting department and the credit reporting system.

From the issuer's perspective, writing off the debt is a tax deduction. The company can claim the loss on their taxes. From your perspective, the charge off is a credit report entry that damages your score. Both terms refer to the same moment: when the issuer stops treating the account as active and starts treating it as a loss.

Neither term means the debt goes away. The issuer can still pursue collection, sell the debt to a collector, or sue you. The write-off is purely an accounting move; the charge off is purely a credit reporting move. The debt itself remains your legal obligation.

How a charge off affects your credit score

A charge off typically lowers your credit score by 100 to 150 points or more, depending on your starting score and credit history. The damage is severe because a charge off signals that you defaulted on the account — you did not just pay late, you stopped paying altogether. Credit scoring models treat charge offs as a sign of high risk.

The charge off also affects your credit mix and payment history, two major factors in credit score calculation. A charge off on a credit card account shows that you failed to meet the terms of a revolving credit account, which is viewed as worse than a single late payment. If you have other accounts in good standing, the charge off will pull your overall score down but may not destroy it entirely. If most of your accounts are also delinquent, the charge off compounds the damage.

The impact lessens over time. A charge off from five years ago will hurt your score less than a charge off from six months ago. After seven years, the charge off is removed from your report entirely and no longer affects your score. However, the damage during those seven years is substantial — you will likely be denied for credit cards, personal loans, and mortgages, or offered only high-interest options.

What happens after a charge off is recorded

After the charge off appears on your credit report, the issuer may continue collection efforts themselves or sell the debt to a third-party debt collector. If sold to a collector, you will receive a notice from the new collector stating they now own the debt and are attempting to collect it. This does not change what you owe, but it changes who is trying to collect it.

The issuer or collector can sue you for the balance. If they win a judgment, they can pursue wage garnishment, bank levies, or liens on property depending on your state's laws. Some states limit how much can be garnished from wages; others allow collectors to take a larger percentage. The judgment itself also appears on your credit report and can stay there for 7 to 10 years depending on your state.

You can still negotiate with the issuer or collector after a charge off. Many collectors will settle for less than the full balance if you offer a lump sum payment. A settlement stops collection efforts but does not remove the charge off from your credit report — the charge off stays for the full seven years. The settlement may be reported as "settled" or "paid in full" next to the charge off, which is slightly better for your credit than leaving it unpaid, but the charge off itself remains.

Charge offs versus other negative credit events

A charge off is more damaging than a missed payment but less damaging than a bankruptcy. A single 30-day late payment lowers your score by 20 to 40 points. A 90-day late payment lowers it by 60 to 100 points. A charge off lowers it by 100 to 150 points or more because it represents complete default, not just lateness.

A foreclosure or repossession is similar to a charge off in severity — both signal that you failed to pay a secured debt and the lender took action. A bankruptcy is more damaging than a charge off because it affects all your debts at once and stays on your report for 7 to 10 years depending on the chapter. A charge off affects one account and stays for seven years from the first missed payment.

A settlement or payment plan does not prevent a charge off if the account is already charged off. If you negotiate with the issuer before the charge off happens — during the 90 to 120 day delinquency period — you may be able to avoid the charge off entirely by bringing the account current or setting up a hardship plan. Once the charge off is recorded, settling the debt stops collection efforts but does not erase the charge off from your report.

Steps to take if your account is charged off

First, verify that the charge off is accurate. Request your credit report from all three bureaus (Equifax, Experian, and TransUnion) through annualcreditreport.com, which is the official free source. Check the date of the first missed payment, the balance reported, and whether the account is still showing as active or charged off. If the information is wrong — for example, if the first missed payment date is incorrect — you can dispute it with the bureau.

Second, determine whether the debt is still within the statute of limitations for your state. Most states allow collectors to sue for credit card debt within 3 to 6 years of the last payment or acknowledgment of the debt. If the statute of limitations has passed, a collector cannot sue you, though they can still contact you about the debt. Check your state's statute of limitations before responding to any collection notice.

Third, if you can afford to pay, contact the issuer or collector and offer a settlement. Many will accept 40 to 60 percent of the balance to close the account. Get any settlement agreement in writing before you pay. If you cannot afford to pay, you can still request that the collector stop contacting you by sending a written cease-and-desist letter, though this does not erase the debt.

Rebuilding credit after a charge off

A charge off will remain on your credit report for seven years, but you can begin rebuilding your credit immediately. Open a secured credit card if you cannot get approved for a regular card. A secured card requires a cash deposit that becomes your credit limit, and on-time payments build your credit history. After 12 to 24 months of perfect payments, you may be able to move to an unsecured card.

Pay all your other accounts on time, every time. Payment history is the largest factor in credit scoring, so perfect payments on your remaining accounts will gradually offset the damage from the charge off. Keep credit card balances low — below 30 percent of your credit limit — to improve your credit utilization ratio.

Do not ignore collection notices or lawsuits. If a collector sues you, respond to the lawsuit even if you cannot pay the full amount. Ignoring a lawsuit can result in a default judgment, which is worse for your credit and your finances than a judgment you contest. If you receive a lawsuit notice, contact a legal aid organization or attorney in your state for guidance.

Frequently Asked Questions

Can a charge off be removed from my credit report before seven years?

A charge off can be removed early only if it is inaccurate. If the issuer or bureau made an error — wrong balance, wrong date, or wrong account status — you can dispute it and have it removed. If the charge off is accurate, it will remain for seven years from the date of the first missed payment. Paying off the debt does not remove the charge off, though it may change the status to "paid."

Will settling a charged-off debt improve my credit score?

Settling a charged-off debt stops collection efforts and may show as "settled" on your report, which is slightly better than "unpaid." However, the charge off itself remains on your report and continues to damage your score. The improvement from settling is modest — usually 10 to 20 points — compared to the damage from the charge off itself. The main benefit of settling is stopping collection calls and lawsuits, not credit score recovery.

Can I be sued for a charged-off credit card debt?

Yes. A charge off does not prevent a lawsuit. The issuer or a debt collector can sue you for the balance at any time before the statute of limitations expires, which is typically 3 to 6 years depending on your state. If they win a judgment, they can pursue wage garnishment or bank levies. Check your state's statute of limitations to understand your risk, and respond to any lawsuit notice you receive.

Does a charge off mean I no longer owe the debt?

No. A charge off is an accounting and credit reporting action only. You still legally owe the full balance. The issuer or a debt collector can still pursue collection, and the debt can be sold to other collectors. The only way to eliminate the debt is to pay it, settle it, or have it discharged in bankruptcy. A charge off simply means the original issuer has stopped trying to collect it themselves.

How long does a charge off stay on my credit report?

A charge off stays on your credit report for seven years from the date of the first missed payment that led to the charge off, not from the charge off date itself. After seven years, the charge off is automatically removed from your report. However, the damage to your credit during those seven years is significant, and rebuilding takes time even after the charge off is removed.