Many people are baffled about how to handle derogatory credit such as charge-offs on their credit reports. If you can get them deleted how is the most effective way to do that? Should you pay off a charge-off or should you just leave it the way it is and try to get it deleted? Well, you should attempt to pay it off but if you don't do it right you would be better off to leave it the way it is. Can you see why it is so baffling?

If a lender is not able to collect a debt within a certain time period they will often just write it off their books as a "charge-off". Oftentimes they will then refer it to a collection agency. The consumer needs to be wary when this happens as both the original lender and the collection agency can report the debt. This gives the consumer two derogatory marks on only one account.

You can get a charge-off removed from your credit report but it is easier to do this if the charge-off is paid in full. The problem is that once you pay off an account it will bring it current. An old charge-off can stay on your credit for 7 years but when you pay it off the 7 years begins again. Therefore by paying off your charge-off you essentially extended the time it will be on your report for an additional 7 years no matter how long it was on the report before you paid it off.

The one way to get around this difficulty is to get an agreement in writing from the original debt owner and any collection agencies before you pay the debt that they will remove it from your credit upon satisfaction. This is called a "pay for delete" and it is the only way you can protect yourself from further difficulties.

Are you aware of the fact that you have the right to dispute any items shown on your credit report? The Fair Credit Reporting Act was enacted to provide consumers the right to dispute anything that appears on your credit report, including charge-offs, collections, tax liens, judgments, repossessions, foreclosures and even bankruptcies. You can try to repair your credit yourself or you can hire a professional credit repair company.

In order to dispute items on your credit report you will need to contact the credit reporting agencies. You can do this by a phone call or contacting them online but the most effective way to approach them is to send a formal letter. This way you will always have a paper trail. The credit reporting agencies have 30 days to investigate your allegations so be sure to document all dates.

During that 30-day period the credit reporting agency is supposed to contact the original lender and the collection agencies with your disputes. They will also check out any public records. It is up to you to follow up with them and make sure that everything is being done. Credit repair takes some time to complete but if you don't follow up it can end up taking even more time.

While it is possible to repair your credit by yourself a professional credit repair company has developed the knowledge and expertise to expedite the process. Since a professional can do it quicker and easier it may be worth your time to consult with them first to see if they can assist you.

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