What Is a Credit Card Charge-Off?
This guide explains what a charge-off is, what it does to your credit, and what happens to the debt afterward.
What a charge-off actually is
When a credit card account goes unpaid for roughly six months, the issuer is required to reclassify it as a loss on its books, which is the charge-off. It is an internal accounting step, not forgiveness. The balance is still legally yours to pay, and interest and fees may keep accruing depending on the terms.
What it does to your credit
A charge-off is one of the most damaging marks on a credit report. It signals serious delinquency, can drop your score sharply, and remains for seven years from the original missed payment. Because it follows months of lateness, your score has usually already fallen from those late payments before the charge-off even posts.
What happens to the debt
After a charge-off, the issuer often sells the debt to a collection agency for pennies on the dollar, and the collector then pursues you. You can still pay, settle, or dispute it. Paying does not remove the charge-off, but it updates to a paid charge-off, which looks better to future lenders. If you are heading toward this, our guides on not paying a card and negotiating debt lay out your options.
- A charge-off is the issuer writing off your balance as a loss.
- It usually happens after about 180 days of non-payment.
- You still owe the debt; a charge-off does not cancel it.
- It is a serious negative that stays on your report for seven years.
- The account is often sold to a collection agency.
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