Ready, Set, Charge-Off!
Robbie is misinformed about how you should deal with credit card charge-offs and the credit bureau.
QUESTION: Robbie has been working Dave’s plan and has a charge-off account. He’s heard Dave say that a paid charge-off is better than a charge-off. He’s also read that a paid debt charge-off will hurt his credit score, and he should have argued to have it removed from his record. Dave explains why both are bad.
ANSWER: Sometimes you can talk them into removing the record altogether, but they are not supposed to. They are supposed to report what happened to the credit bureau. What happened was you didn’t pay the bill. You went into deadbeat status, and now you’ve come back and paid the bill, which is better than never doing that. If the money was owed to you, you would rather have some money than none at all.
Another creditor in the future would say that you went into deadbeat status, but you came back and paid. That’s better than someone who just walked away and didn’t pay their bill. That should be reflected accurately in your credit score and your credit in general. Sometimes you can twist their arm and ask them to report to the credit bureau that this is paid or have it taken off completely. You can ask them to do that, but it’s up to them.
The credit bureaus are only supposed to be a mirror that reflects what has happened. They are not supposed to have any other information. Sometimes they have inaccurate information from the creditor or type it in wrong. You can ask them to take it off, but don’t hold your breath.