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How to get a charge-off removed from credit reports

One of the most detrimental credit items on your credit report is a charge-off so it is important to get a charge-off removed, if possible, in order to save your credit score.

Question: Lisa, I'm not sure you can advise on this issue or not but here it goes. I lost my job temporarily about 3 years ago so my wife and I had to make several decisions regarding our debt responsibilities.

We decided to contact a debt counseling service to help with our concerns and money issues.

As of today we have paid over $40,000 towards our debt in the last 20 months with help of the debt counseling service.

All of our creditors agreed to participate in a negotiated monthly payment program through the debt counseling service which we have maintained in good faith for 20 months.

Here's the problem…My wife's Macy's credit card account was charged off the same month we started making the new monthly payments. The account had a balance of about $2100 when it was charged off. We have made 20 payments towards that account and reducing the balance to under $800.

We had recently tried o refinance on our home when we found out about the inquiry on my wife's credit report regarding the Macy's charge-off. We have tried numerous times to try and talk to someone with Macy's with no success.

How do we deal with the charge-off inquiry and is there any way to get it removed from her credit report since we have been in good faith since the charge-off was reported.? BTW, we never received any information about the charge-off after reported in November 2009.

Answer: Dispute. Getting a charge-off removed from your credit report is not impossible, but it may take several approaches. One approach would be to dispute the charge-off if there is a factual error, such as the wrong amount reporting on your wife’s credit.

The problem with disputing a charge-off comes if the charge-off is verified as correct. A verified dispute will update the “date of last activity” on an account and make the charge-off look more recent. You run a real risk of lowering your credit score and since you are attempting to refinance, this would be detrimental.

Goodwill Letter. I would say talk to your creditor but it seems you have exhausted that avenue. Now it is time to write your creditor. Find out the name of a vice president or someone in charge of Macys credit department, customer service and/or customer relations.

You want to negotiate with someone with the authority to remove the charge-off from your credit report. Often times, representatives and even their supervisors are unaware of how things function. But authority figures know if they put something on your credit report, they can very well have it removed.

I know you are frustrated with this situation but remain polite, professional and succinct. You want to want to convince someone in charge to remove the charge-off from your credit report in exchange for payments already made and future payments to come.

It may not appear like it but you are in a good position to negotiate because you have already made good faith payments toward paying off the debt. You should also state you had a temporary loss of income but now your financial situation has stabilized and this can be proved by the already 20 payments made on the account. Be as precise as possible, request a deletion of the charge-off and send your letter certified, return receipt mail.

If you have any cash on hand to pay off the debt your negotiating power is increased. Request a deletion for an immediate payment in full; it may help you get what you want.

If you are able to convince the creditor to delete the charge-off make sure you get the agreement in writing. Request the creditor put it in writing and fax it to you immediately or you draft an agreement on your own.

If you have to draft the agreement, get the name, mailing address, and phone number of the person you spoke with and send a copy via certified mail with return receipt requested. Request a signed copy be sent back to you. Here is a sample goodwill letter, it is not the same as your situation but it can provide a framework to compose the letter you need.

Closed/Current. If you are unable to negotiate a deletion request the account status be changed to “Closed/Current.” Typically, a “closed/current” status means the account is closed, and it was current at the time it was closed. Even though the account was not current at the time of closing, it does not hurt to ask for that notation. If not, simply ask for a “Closed” status. A closed account is less negative than a charged-off account notation. Good luck to you.

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