What Is a Charge Off?


Quick Answer

The term "charge off" describes debt that a credit grantor decides to treat as a loss in its financial records. Creditors may charge off a debt after a borrower fails to make adequate monthly payments for six months.

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Full Answer

A charge off represents a serious financial delinquency on the part of the borrower and leads to significant negative effects on one's credit report. When a debt is charged off, negative information may be added to one's credit file for up to seven years. A borrower may be able to negotiate with the creditor to have the charge off entry removed from his credit report once the debt is paid.

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