What Is a Charge-Off? Definition and Credit Report Rules

What Does Charged Off Mean on a Credit Report?

A charge-off is an accounting action, not a forgiveness of debt. When a consumer stops paying, federal banking regulators generally require creditors to write the account off as a loss after a set period — commonly around 120 days past due for closed-end loans like auto or personal loans, and around 180 days for open-end accounts like credit cards. The creditor moves the balance from an asset to a loss on its own books, and the account's status on your credit report changes to 'charged off.'

The key point many consumers miss: the debt is still legally owed after a charge-off, and the original creditor can still collect it, assign it to a collector, or sell it to a debt buyer. 'Charged off' describes what the creditor did in its accounting — it does not describe anything that happened to your obligation.

How Does a Charge-Off Get Reported?

After the charge-off, the original account continues to appear on your credit report with a charged-off status. If a balance remains unpaid, the entry will typically show that balance. The account's payment history — including the months of late payments leading up to the charge-off — stays attached to the entry.

If the debt is later sold, a second entry from the collection agency or debt buyer may appear alongside the original. When a debt is sold, the original creditor's entry should generally update to show a zero balance, because the debt is now owned by someone else. Seeing the same debt reported twice with two balances is one of the accuracy issues worth checking. Our guide to [[/learn/collections-accounts-credit-report|collections accounts on a credit report]] explains how these paired entries should look.

How Long Does a Charge-Off Stay on a Credit Report?

Under the Fair Credit Reporting Act (15 U.S.C. § 1681c), most negative information — including charge-offs — may be reported for up to seven years. The clock is anchored to the date of first delinquency: the date the account first went late and was never brought current again before the charge-off. That date does not reset when the debt is sold, when a collector takes over, or when you make a payment.

Because the reporting window is anchored to one fixed date, the date of first delinquency on each entry is one of the most important fields to verify. If two entries for the same debt show inconsistent dates, or if an entry appears older than seven years from that date, those are potential accuracy questions. See the [[/learn/glossary#date-of-first-delinquency|glossary definition of date of first delinquency]] for how this field works.

Charge-Off vs. Collection: What Is the Difference?

A charge-off is a status on the original creditor's account; a collection is a separate account opened by a collector or debt buyer. Both can appear on the same report at the same time for the same underlying debt. The original entry records what happened before the creditor gave up on regular collection, while the collection entry records who is trying to collect now.

Paying or settling a charged-off debt updates the account's status — for example, to 'paid charge-off' — but it does not erase the charge-off history or restart the reporting clock. Whether a lender weighs a paid charge-off differently than an unpaid one depends on that lender's own criteria and the scoring model used.

What Should You Check for Accuracy?

Charge-off entries have several fields that are frequently reported inconsistently: the balance, the date of first delinquency, the account status after a sale, and the payment history leading up to the charge-off. A balance still showing on an account that was sold, a delinquency date that moved forward after a sale, or an account you do not recognize at all are all worth a closer look.

Start by comparing the entry across all three bureau reports, since creditors do not always report to all three. If you believe a detail is inaccurate or incomplete, you can dispute it with the bureau reporting it and with the company that furnished the information. The [[/learn/credit-report-error-checklist|credit report error checklist]] and the guide to [[/learn/how-to-dispute-credit-report-error|disputing a credit report error]] walk through that process step by step.

Frequently asked questions